3. external analysis

7/29/2019 3. External Analysis

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Strategic Marketing Management

Naveed Ilyas

[email protected]


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External Analysis

Customer Analysis Competitor Analysis

Market/submarket Analysis

Environmental Analysis and Strategic Uncertainty

Setting priorities for Businesses and Brands


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Identification

Trends / future events Threats / Opportunities Strategic Uncertainties

Analysis

Information need areas Scenario analysis

StrategicDecisions

Where to compete How to compete


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Strategic uncertainty is a particular useful

concept in conducting external analysis

It focuses on specific unknown elements thatwill affect the outcome of strategic decisions

Each of these strategic uncertainties can in

turn, generate another level of strategicuncertainties


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Strategic Uncertainties

Will a major firm enter?

Will a technology be replaced /

Will the rupee strengthen against anoffshore currency?

How sensitive is the market to price?

Strategic Decisions

Investment in a product marketInvestment in a technology

Commitment to offshoremanufacturing

A strategy of maintaining price parity


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The scope of industry external analysis can involve anindustry broadly defined (transport industry),narrowly defined (luxury train coaches) or using ascope that may fall in between:

Railways

Passenger trains

Express trains

The level of analysis will depend on the

organizational unit and strategic decisions involved

One approach to defining the market is to specify thebusiness scope. It can be identified in terms of theproduct market and in terms of the competition


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Approach to External analysis

Customeranalysis

Competitoranalysis

Marketanalysis


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Who are our Current and Potential Customers?1. What are the demographic, geographic and psychographic

characteristics of our customers?

2. Who actually purchase our products?

3. Do these purchasers differ from the users of our products?

4. Who are the major influencers of the purchase decision?5. Who is financially responsible for making the purchase?

What do customers do with our products?1. In what quantities and in what combinations are our products

purchased?

2. How do heavy users of our products differ from the light users/

3. Do purchasers use complimentary products during theconsumption of our products?

4. What do the customers do with our products after consumption?

5. Are our customers recycling our products or packaging?


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Where do customers purchase our products?1. From what types of vendors are our products purchased?2. Does e-commerce have an effect on the purchase of our

products?

3. Are our customers increasing their purchasing from nonstore outlets?

When do customers purchase our products?1. Are the purchase and consumption of our products

seasonal?

2. To what extent do promotional events affect the purchaseand consumption of our products?

3. Do the purchases and consumption of our products varybased on physical surroundings, perceptions or thepurchase task?


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Why (and how) do customers select our products?1. How do our products features compare with competitors?

2. What are the customers needs fulfilled by our products andour competitors products?

3. Are the needs of our customers expected to change in the

future? If so, how?4. What mode of payment do customers use when purchasing

our product?

5. Is the buying behavior discrete or relationship building?

6. How can we develop, maintain and enhance customerrelationship?

7. What are needs of the customers which are not met by ourproducts?

8. What is the potential of converting noncustomers tocustomers of our products?


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Exploration of unmet needs

An analysis of customer motivations

How the market segments


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Can acompetitiveoffering bedeveloped

and

implemented?

Is thecompetitive

offeringsustainable?

Is theresulting

business fromthe targetsegment

worthwhile?


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CUSTOMER CHARACTERISTICS

Geographic Small per-urban communities for

discount stores

Type of organization Computer needs of banks vs retailers

Size of the firm Large hospitals were small sized ones

for pharmacy purchases

Lifestyle Metro sexual men prefer man saloon

services

Sex Mother of young children

Age Cereals for kids


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PRODUCT RELATED APPROACHES

User type Appliance buyers- home builders,

homeowners

Usage Concerts: seasonal ticket holders,

occasional patrons, nonusers

Benefits sought Dessert eaters- calorie conscious

versus convenience seekers

Competition For Mc donalds: KFC, Hardees, Burger

King

Price sensitivity Economy driven Q mobile buyers

versus prestige driven I Phone users

Brand loyalty Those who stick to Heinz ketchup

versus price buyers


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After segmentation, you need to answer

questions such as:

What is behind the purchase decision? How does that differ by segment?


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Newbie shoppers: need simple interface, and lotof hand holding and assurance

Reluctant shoppers: need information,reassurance and access to live customer support

Frugal shoppers: need to be convinced that priceis good and they dont have to search elsewhere

Strategic shoppers: need access to opinions ofpeers or experts and choices in configuring theproducts they buy

Enthusiastic shoppers: need community tools toshare their experiences as well as engaging tools

Convenience shoppers: want superior customerservice


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Role of Qualitative Research

Qualitative research is a powerful tool in

understanding customer motivation

It can involve: Focus group sessions

In-depth interviews

Customer case studies


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Buyer Hot Buttons

Hot buttons are motivations whose salience and

impact on markets are significant and growing.

e.g. retail food products hot buttons include:

Freshness

Healthy eating

Gourmet eating

Meal solutions

Low carb foods


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An unmet need is a customer need that is not

being met by the existing product offering

Unmet needs represent opportunities to

increase market share of firms, break into amarket or create and own new markets

They can also be a threat for established

firms since they can be a lever enabling

competitor entryThe key is to stretch the technology or apply

new technology in order to expose unmet

needs


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Who are the competitors?

Against whom do we usually compete/ Who

are our most intense competitors ? Less

intense but still serious competition?Can these competitors be grouped into

strategic groups?

Who are the potential competitive entrants?

What are the entry barriers


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Public

Trade

Government

Investors


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Evaluating the competitors

What are their objectives and strategies? Their

level of commitment?

What is their cost structure?

What is their image and positioning strategy?

What are the strengths and weaknesses of each

competitor?


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Product

Category

Brand

Competitors

Product

Competitors

Generic

Competitors

Total Budget

Competitors

Luxury cars(transportation)

ToyotaHonda

TrucksPassenger carsMinivans

Rental carsMotor cyclesBicycles

VacationHomeremodeling

Soft drinks(refreshments)

Coca colaPepsi cola

TeaOrange juiceBottled water

Tap water CandyPotato chipsGum

Movies(entertainment)

Harry potterThe Matrix

Cable TVVideo rentals

Athletic eventsConcerts

ShoppingReadingVacations


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A strategic group is a group of firms that:

Over time pursue similar competitive strategies

(e.g. use of same distribution channel, the same

type of communication strategies, or the same

price / quality position)

Have similar characteristics (e.g. size,

aggressiveness)

Have similar assets and competencies (such as

brand associations, logistics, capability, globalpresence and development)


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Competitive analysis should progress through thefollowing stages:

1. Identification: Identify all current and potentialbrands, products, generics, and total budgetcompetitors

2. Characteristics: Focus on key competitors byassessing the size, growth, profitability, objectives,strategies and target market for each one

3. Assessment: Assess each competitors strengthsand weaknesses

4. Capabilities: Focus the analysis on each keycompetitors marketing capabilities

5. Response: Estimate each competitors most likelystrategies and responses under differentenvironment situations as well as its reactions tofirms own marketing effort


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It is also important to consider potential marketentrants such as firms that might engage in:

1. Market expansion: e.g. a fast food chain shouldobserve chains in other regions e.g. Hardeesoutlet opening in Karachi

2. Product expansions: Khaadi going into formalwear by introducing Khaadi Khas

3. Backward integration: Fruit orchids acquired byMitchells

4. Forward integration: Apple opening its ownoutlets in Karachi

5. The export of assets or competencies: e.g. Aweak competitor acquired by a big market playeror strategic mergers


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Market analysis builds on the customer and

competitor analysis to make some strategic

judgments about the market and submarket

and its dynamics

One if the primary objectives of market

analysis is to determine the attractiveness of

a market to current and potential

participantsThe need is to identify emerging submarkets,

key success factors, trends, threats,

opportunities and strategic uncertainties


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Emerging submarkets

Actual and potential market size

Market growth

Market profitabilityCost structure

Distribution system

Key success factors


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Important questions to be answered:

Are submarkets emerging defined by lower price

points, emergence of niches, new applications, a

customer trend or new technology?

What is the size and growth of the submarket?

Can we make money in this submarket?

What is the cost structure for operations?

What are the dynamics of distribution system?

What are the key success factors, assets and

competencies needed in this submarket?


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Industryprofitability

Bargainingpower ofsuppliers

Threat ofpotentialentrants

Competitionamongexisting

firms Threat ofsubstituteproduct

Bargainingpower ofcustomers


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KSFs are the assets and competencies that providethe basis for competing successfully

They are of two types: Strategic necessities: do not necessarily provide and

advantage because others have them, but their absencewould create a substantial weakness

Strategic strengths:firms assets and competencieswhich provide a base of advantage

Also it is critical to determine new and emerging KSFs of theindustry e.g. for industrial firms technological innovation isimportant in introduction and growth phase but role of systemscapability, marketing and services becomes important inmaturity phase . For consumer goods, marketing anddistribution is important in intro and growth phase whilemanufacturing and operations become crucial in maturity phase.


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Technology trends Technologies changing ? Maturing ?

Consumer trends Emerging consumer trends ? Life styles ? Fashion?

Demographics and its impact on market size andsubmarkets

Government / economic trends Regulation, political risks of operating in a

government jurisdictionGeneral Questions Significant trends and future event s

Uncertainty in the environment


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Thank You

3. external analysis

Documents