Tom Gillpatrick, Ph.D.

Juan Young Professor of Marketing & Executive Director, FILC

Master International Management Program

School of Business Administration

Portland State University

Global Marketing

Fall 2004Fall 2004

MIM 515MIM 515

10-Nov10-Nov

Agenda

• Market Research

• Competitor Analysis

• Colgate Case

• Samsung Case

• Case Analysis Discussion

• Quiz

Marketing Research Defined

Marketing research is the planning, collection, and analysis of data relevant to marketing decision making and the

communication of the results of this analysis to management.

Market Research Examples

Market strategy• Segmentation• Profiling• Market simulation

Corporate marketing• Branding• Image tracking• Positioning• Web site evaluation

Product marketing• Packaging tests• Naming• Price/voluem

estimation• Advertising

effectivenessChannels• Dealer programs• Direct sales evaluation• Win/loss studies

International Research Griggs-Anderson/Gartner Consulting

Market Research Examples

Product development• Concept testing• Feature valuation• Consumer ethno-

graphics• Beta tests

Customer satisfaction• Tracking studies• Models• Transaction

monitoring

• Factors influencing a manager’s decision to use research information.– Conformity to prior expectations.– Clarity of presentation.– Research quality.– Political acceptability within the firm.– Lack of challenge to the status quo.

Managing the Research Process

Forward Research Design

Define the research problem

Check secondary sources

Determine primary research strategy

Estimate research cost

Design questionnaire

Define sample

Implement research design

Analyze data

Write report

Turning the Process on Its Head

The backward approach I advocate rests on the premise that the best way to design usable research is to start where the process usually ends and then work backward.

1. Determine how the research results will be implemented (this helps to define the problem).

2. To ensure the implementation of the results, determine what the final report should contain and how it should look.

3. Specify the analyses necessary to fill in the blanks in the research report.

Turning the Process on Its Head

4. Determine the kind of data that must be assembled to carry out these analyses.

5. Scan the available secondary sources and/or syndicated services to see whether the specified data already exist or can be obtained quickly and cheaply from others. (While you are at it, you should observe how others have tried to meet data needs like your own.).

6. If no such easy way out presents itself, design instruments and a sampling plan that will yield the data to fit the analysis you have to undertake.

Turning the Process on Its Head

7. Carry out the field work, continually checking to see whether the data will meet your needs.

8. Do the analysis, write the report, and help management make it have its intended effects.

What else does this process do?

Backward Research Design

Determine what key decisions are to be made using research results

Determine what information will help management make the best decisions

Prepare prototype report and ask management if this is what will best help them make their decisions

Determine the analysis that will be necessary to fill in the report

Determine what questions must be asked to provide the data required by the analysis

Ascertain whether the needed questions have been answered already

Backward Research Design

Design sample

Implement research design

Analyze data

Write report

Assist management to implement the results

Evaluate the research process and contribution

Advantages of Manager Participation in Backward Research

1. It serves to co-opt managers into supporting the research work should it be criticized later by others.

2. It deepens their understanding of many of the details of the research itself and their appreciation of both its strengths and its weaknesses.

3. Working with hypothetical tables can make the manager eager for the findings when they do appear and ready to implement them.

Advantages of Manager Participation in Backward Research

4. Working with contrasting tables makes it unlikely that the manager will be startled by surprising results, an outcome that sometimes causes a manager to reject an entire study.

5. Participation will also help reveal to management any limitations of the study. In my experience, managers are often tempted to go far beyond research “truth” when implementing the results, especially if the reported truth supports the course of action they prefer to take anyway.

What’s Important Depends on Your Perspective

Marketing people put more emphasis on price while engineering puts more perceived customer value in display.

+1

0

-1

Price Display

Engineering Perspective

Marketing Perspective

Relative Importance

Estimating Market Potential

• Current market demand– Demand for our firm

– Demand for all competitive firms

• Potential demand– Not aware– Not available– Unable to use– Lacks benefits– Not affordable

Demand

MarketDemand

CompanyDemand

Estimating Current Demand

• Total market potential

• Area market potential

• Industry sales

• Market share

Ninety Types of Demand Measurement (6 X 5 X 3)

All salesAll sales

Company salesCompany salesProduct line salesProduct line sales

Product form salesProduct form salesProduct item salesProduct item sales

Industry salesIndustry sales

ProductProduct levellevel

TerritoryTerritoryRegionRegion

U.S.A.U.S.A.

CustomerCustomer

WorldWorldSpaceSpacelevellevel

Short run Medium run Long run

Time levelTime level

Factors Driving Market Growth

• Current factors– Felt need– Perceived risk– Innovativeness– Type of decision

• Product positioning– Relative advantage– Relative cost– Relative complexity– Ease of use

• Market influences– Observability– Trialability– Marketing effort

• Faster growth– High– Low– High– Individual

– Attractive– Low– Minimal– Easy

– Easily seen– Easy to try– Extensive

Performance Measurement

Internal Measures External Measures• Unit Cost• Mfg. Overhead• Mktg. Expense• R&D Expense• Inventory Turn• Sales/Employee• Day’s Act.’s Receivable• ROS, ROI, ROE• Asset Turnover

• Market Share• Relative Share• Customer satisfaction• Market Coverage• Product awareness• Relative quality• Relative Price• Customer Preferences• Relative New Product• Response Time

Market Strategy, Marketing Mix, & Performance

Market Strategy

Market Mix Strategy

Customer Satisfaction

Net Marketing

Contribution

Roger Best, 1997Market-Based Mgt.

Fundamental Market-Based Strategies & Profit Growth

Strategies to Grow Demand

Manage Market Share

Grow Customer

Purchases

Enter or ExitMarkets

Lower VariableCost per Customer

Increase MarketingEfficiency

Net Marketing Contribution

Market

Demand

Market Share

Revenue Variable per - Cost perCustomer Customer

MarketingExpense

X X -=

COMPETITOR ANALYSISCOMPETITOR ANALYSIS

What You Should Expect From A Competitor Analysis

•Which competitors does our strategy pit us against?

•What are competitor strengths and weaknesses? (Core capabilities, ability to grow, ability to respond)

•What are your competitors strategies?

•What kind of counter moves will the competitor accept? Which moves has it already countered?

Induce your competitors not to invest in Induce your competitors not to invest in those products, markets and services those products, markets and services where you expect to invest the most … where you expect to invest the most … that is the fundamental rule of strategy.that is the fundamental rule of strategy. Bruce Henderson, Founder of BCGBruce Henderson, Founder of BCG

There is nothing more exhilarating than There is nothing more exhilarating than to be shot at without result.to be shot at without result. Winston ChurchillWinston Churchill

Five Forces Determining Segment Structural Attractiveness

Potential Entrants(Threat ofMobility)

Potential Entrants(Threat ofMobility)

Buyers(Buyer power)

Substitutes(Threats ofsubstitutes)

Suppliers(Supplier power)

Suppliers(Supplier power)

IndustryCompetitors

(Segment rivalry)

PORTER’S FIVE FORCES MODELDeterminants of Supplier PowerDifferentiation of Inputs:Switching Costs:Presence of substitute inputs:Supplier concentration:Importance of volume to supplier:Cost relative to total purchases in the industry:Impact of inputs on cost or differentiation:Threat of forward vs. backward integration:

Determinants of Buyer PowerBuyer concentration vs. firm concentration:Buyer volume:Buyer switching costs vs. firm switching costs:Buyer information:Ability to backwards integrate:Substitute products:Pull through:

Entry BarriersEconomies of scale:Proprietary product differences:Brand identity:Switching costs:Capital requirements:Access to distribution:Absolute cost advantages:Proprietary learning curve:Access to necessary inputs:Proprietary low-cost product design:Government Policy:Expected retaliation:

SubstitutesRelative price/performance of substitutes:Switching costs:Buyer propensity to substitute:

Rivalry DeterminantsIndustry growth:Fixed costs/value added:Intermittent overcapacity:Product differences:Brand identity:Switching costs:Concentration & balance:Informational complexity:Diversity of competitors:Corporate stakes:Exit barriers:

Price sensitivity:Price/total purchases:Product differences:Brand identity:Impact on quality/performance:Buyer Profits:Decision makers incentives:

Competitive rivalry

Competitor Analysis & Competitive Positioning

• Competitive Environment– Market Entry/exit– Buyer/supplier power– Substitutes/rivalry

• Competitive Position– Competitor intelligence– Competitor analysis– Competitive benchmarking

• Competitive advantage– Cost advantage– Quality advantage– Marketing advantage

Competitive Position & Competitive Advantage

• Cost Advantage– Variable Costs– Marketing Expenses– Operating/Overhead Expenses

• Differential Advantage– Product Differentiation– Service Quality– Brand Reputation

• Marketing Advantage– Distribution– Sales Effort– Marketing Communications

Developing Competitive Advantage

DifferentiationAdvantage

Differentiationwith Cost

Advantage

Stuck-in-theMiddle

Low CostAdvantage

Superior

Inferior

RelativeDifferentiationPosition

Inferior Superior

Relative Cost Position

Niche Mainstream

Pro Forma Year 1 Year 2 Year 1 Year 2

Unit Volume 13,000 20,000 42,000 59,000

Retail unit sales 8,000 15,000 27,000 44,000

Retail Dollar Sales $16,160.00 $30,300.00 $47,520.00 $77,440.00

Professional unit sales 3,000 3,000 8,000 8,000

Professional Dollar Sales $ 2,466.00 $ 2,466.00 $ 6,576.00 $ 6,576.00

Total Unit Sales 11,000 18,000 35,000 52,000

Total Dollar sales $18,626.00 $32,766.00 $54,096.00 $84,016.00

Niche Mainstream

Pro Forma Year 1 Year 2 Year 1 Year 2

Manufacturing Costs $ 7,260.00 $11,880.00 $22,400.00 $33,280.00

Sampling costs $ 1,320.00 $ 1,320.00 $ 4,480.00 $ 4,480.00

Adv. & Promotion $11,200.00 $11,700.00 $32,800.00 $29,000.00

Capacity Costs $ 317.00 $ 450.00 $ 887.00 $ 1,270.00

Total Costs $18,777.00 $24,030.00 $56,087.00 $63,550.00

Niche Mainstream

Pro Forma Year 1 Year 2 Year 1 Year 2

Operating Profits $ (151.00) $ 8,736.00 $ (1,991.00) $20,466.00

Profits as Percentage of Sales -81% 26.66% -3.68% 24.36%

Cost of Cannibalization $ 2,298.00 $ 3,761.00 $ 12,537.00 $18,626.00

Profit after cannibalization $ (2,449.00) $ 4,975.00 $ (14,527.00) $ 1,840.00

Objectives Colgate Case• To explore the evolution of a product category,

demand for which is largely derived from usage of a related product.

• To review a new product development process and the importance of evaluating product company and product market fit in assessing NPD opportunities.

• To emphasize the importance and marketing program implications of determining whether a new product represents a big breakthrough idea or a line extension.

• To consider the relative merits of emphasizing a corporate brand umbrella vs. an individual brand names when launching a new product.

Samsung Case• To Illustrate the critical importance of effective

marketing in achieving a corporate turnaround.

• To demonstrate the cross-border consumer research in guiding global brand repositioning.

• To explore the marketing planning and budgeting challenges typical of a multinational company (MNC) with a single global brand.

• To explore the responsibilities of a CMO in a major MNC.

Summary for Case Analysis

• What is a case?

• What is purpose of case analysis?

• How to analyze a case?

• How to write a case?

• How to discuss a case?

• Questions?

Written Case Analysis MIM 515

• Format- 5 pages– Executive summary- 1 page

– Analysis

– Conclusion

– Attachments/Appendix (optional)

Executive Summary• Introduction:

– Overview of key issues– Decision Context

• Problem Statement– What are key managerial problems– Use question format, prioritize– Focus- underlying problem Vs. symptom

• Recommendations– Do they address problem(s)

Case Analysis• What is analysis?

– Critical breaking apart data/facts and processing to add meaning

– Can be quantitative or qualitative– Developing structure to convey meaning- eg.

pro/con analysis, model

• What is NOT analysis?– Restating case facts– listing solutions

Recommendations

• Link to key problems.

• What are implications for action?

• Do not confound with analysis section.

• Is there a theme?

• Are recommendations supported by analysis? Do they flow from analysis?

Appendix-Examples

• Do you have any graphs charts that support analysis?- (label, reference)

• Calculations that are too detailed for body of paper

• Assumptions that you feel are necessary to support analysis

Industry Research

Research Overview: Key Questions

• What is the target industry?

• What is the industry overview?

• What are the industry norms?

• Who are the key players?

• What is the size of the market & market share?

• What are the forecasts and trends?

What is the target industry?• Internet:

– SIC Manual Online: http://www.osha.gov/oshstats/sicser.html

– NAICS & SIC Correspondence Tables: http://www.census.gov/epcd/www/naicstab.htm

• Paper (behind Business Reference Desk)

– SIC Manual: HF1042 .U58 1987

– North American Industry Classification System (NAICS): HF1042 .N67 1998

What is the industry overview?• Internet

– Hoovers: http://www.hoovers.com/industry/resources.html

– Current Industrial Reports: http://www.census.gov/cir/www/index.html

– VIKAT: http://www.lib.pdx.edu/netwk/sirsi.html

• Paper (Basement)– Moody’s Industry Review: Reference HG4961.M68– Standard and Poor’s Industry Surveys: Reference

HG4905.S66– Manufacturing USA: Reference HD9721 .M364

What are the industry norms?• PSU Databases:

– ABI Inform– Lexis - Nexis– Investext

• Paper: (behind Business Reference Desk)

– Almanac of Business and Industrial Financial Ratios: HF5681 .R25 T68

– Industry Norms and Key Business Ratios: HD9724 .I514

Who are the key players?• Internet

– Forbes Annual Report on American Industry: http://www.forbes.com/

• PSU Databases– http://www.lib.pdx.edu/netwk/databases.html

– Disclosure Global Access (sort by SIC)

• Paper CorpTech Directory of Technology Companies: Reference T12 .C82

What is size of market/market share?

• PSU Databases– http://www.lib.pdx.edu/netwk/databases.html

– ABI Inform

– Lexis - Nexis

– Investext

• Paper (behind Business Reference Desk)

– Market Share Reporter: HF5410 .M35

– U.S. Industry and Trade Outlook: HC106.5 .A17

What are the forecasts and trends?

• PSU Databases– http://www.lib.pdx.edu/netwk/databases.html

– Investext

– Lexis - Nexis

– ABI Inform

• Paper– U.S. Industry and Trade Outlook: HC106.5.A17 (behind

Business Reference Desk)

– Standard & Poor’s Industry Surveys: Reference HG4905.S66

Quiz #3 Due 11-15

1. C6-n6

2. C6-n103. C6-n12, part two use Costco (rather than Sears & K Mart)

4. C7-n1

5. C7-n11

6. Briefly apply Ch:4 GM to Samsung case relative to benefits and challenges of global branding