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Marketing ManagementStephan Langdon, MBA, M.Ed.
Week 4
PPT 4-3
Dimensions of a Market Analysis
• Emerging submarkets• Actual and potential market and submarket
size• Market and submarket growth• Market and submarket profitability• Cost structure• Distribution systems• Trends and developments• Key success factors
Emerging Submarkets
Relevance!
PPT 4-4
Chapter 4 - Market and Submarket Analysis
PPT 4-5
SUV
Hybrid
Marketing the Wrong Product
PPT 4-6
Brand PreferenceBrand Relevance
SUV
Determine
Brands to
Consider Mercedes
Select Brand to Buy
Lexus BMW Mercedes
Select Product
Category or Subcategory
Customer Decision Process
Chapter 4 - Market and Submarket Analysis
PPT 4-7
Questions to Help Structure a Market Analysis
• SubmarketsAre augmented products, emerging niches, trend toward systems, new applications, repositioned product classes, customer trends, or new technologies creating worthwhile submarkets? How should they be defined?
• Size and GrowthPotentially important submarkets? Size and growth characteristics? Submarkets declining? How fast? Driving forces behind the trends?
Figure 4.1
Chapter 4 - Market and Submarket Analysis
PPT 4-8
Questions to Help Structure a Market Analysis
• ProfitabilityHow intense is the competition among existing firms? Threats from potential entrants and substitute products? Bargaining power of suppliers and customers? Attractive/profitable markets or submarkets?
• Cost StructureMajor cost and value-added components for various types of competitors?
Figure 4.1
Chapter 4 - Market and Submarket Analysis
PPT 4-9
Questions to Help Structure a Market Analysis
• Distribution SystemsAlternative channels of distribution? How are they changing?
• Market Trends
• Key Success FactorsKey success factors, assets, and competencies to compete successfully? Can assets and competencies of competitors be neutralized?
Figure 4.1
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7-10
Characteristics of Business Markets
• Fewer, larger buyers• Close supplier-customer relationships• Professional purchasing• Many buying influences
• Multiple sales calls• Derived demand• Inelastic demand• Fluctuating demand• Geographically concentrated buyers• Direct purchasing
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7-11
Buying Situation
Straight rebuy
Modified rebuy
New task
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7-12
Systems Buying and Selling
Turnkey solution desired;
Bids solicited
PrimeContractors
Second-tierContractors
System subcomponents
assembled
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7-13
The Buying CenterInitiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers
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7-14
Sales Strategies
Small Sellers
Large Sellers
Key Buying Influencers
MultilevelIn-depthSelling
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7-15
Stages in the Buying Process: Buyphases• Problem recognition• General need description• Product specification• Supplier search• Proposal solicitation• Supplier selection• Order-routine specification• Performance review
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7-16
Table 7.2 Buygrid Framework
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7-17
Forms of Electronic Marketplaces
• Catalog sites• Vertical markets
• Pure play auction sites• Spot markets
• Private exchanges• Barter markets
• Buying alliances
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7-18
Methods of e-Procurement• Websites organized using vertical hubs• Websites organized using functional hubs• Direct extranet links to major suppliers• Buying alliances• Company buying sites
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7-19
Table 7.3 Vendor Analysis
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7-20
Establishing Corporate Trust and Credibility
Expertise
LikeabilityTrustworthiness
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7-21
Factors Affecting Buyer-Supplier Relationships
Availability of alternatives
Supply marketdynamism
Complexity ofsupply
Importance ofsupply
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7-22
Categories of Buyer-Seller Relationships
• Basic buying and selling• Bare bones• Contractual transaction• Customer supply
• Cooperative systems• Collaborative• Mutually adaptive• Customer is king
Chapter 4 - Market and Submarket Analysis
PPT 4-23
Detecting Maturity and Decline
• Price pressure caused by overcapacity and the lack of product differentiation
• Buyer sophistication and knowledge
• Substitute products or technologies
• Saturation
• No growth sources
• Customer disinterest
A group of organizations (i.e., sellers) offering goods or services that are similar and close substitutes for one another
What’s an industry?
Is the market vs. industry distinction important?Why or why not?
Does industry attractiveness matter? Why or why not?
A Tool for Assessing Industry Attractiveness: Porter’s Five Forces
Rivalry among existing industry
firms
Threat of substitute products
Bargainingpower
of buyers
Bargaining power
of suppliers
Source: Adapted from Michael E. Porter, “Industry Structure and Competitive Strategy: Keys to Profitability,” Financial Analysts Journal, July-August 1980, p. 33.
Threat of new entrants
Porter: Win - Lose
“ The implicit essence of Porter’s theory is that corporate competitiveness play is a “win by some - lose by some” play, where the firms which are competitively agile will alone sustain themselves and grow. In a sense Porter’s theory reflects modern corporate Darwinism where only the fittest would survive.”
Sixth Force
Economic Liquidity• The level and
sustainability of economic liquidity in the value chain of a firm constitute an essential competitive force.
Downes’ Three new Forces
Deregulation:
Globalization:
Digitalization:
• shrinking of government influence• improvements in logistics and communication
• power of IT
Chapter 4 - Market and Submarket Analysis
PPT 4-31
Competitive Risk
• Overcrowding
• Superior competitive entry
Market Changes
•Changing KSFs
• New technology
• Disappointing growth
• Price instability
Firm Limitations
• Resource constraints
• Distribution unavailable
Figure 4.5
Risks of High-Growth
Market
Political-Legal Environment
Increase in business legislation
Growth of specialinterest groups
3-33
MIS Systems Provide Information on Buyer Preferences and Behavior:Dupont’s Pillow Study
Pillow Segments• 23% - stackers• 20% - plumpers• 16% - rollers or folders• 16% - cuddlers• 10% - smashers
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3-34
What is a Marketing Information System (MIS)?
A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,
timely, and accurate information to marketing decision makers.
Internal Records and Marketing Intelligence
Order-to-PaymentCycle
Databases,Warehousing, Data Mining
MarketingIntelligence
System
Sales Information
System
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4-36
The Measures of Market Demand
PotentialMarket
PenetratedMarket
TargetMarket
AvailableMarket
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4-37
Figure 4.4 Ninety Types of Demand Measurement
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4-38
Figure 4.5 Market Demand Functions
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4-39
Figure 4.5 Market Demand Functions
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4-40
Table 4.6 Calculating Brand Development Index
41
The Conentional Marketing Mix
Product Price
Place/distribution Promotion.
Plus 4 P’s
Processes,
Productivity
[technology ]
People [employee
s],
Physical evidence