Cbs marketing audit and the market environment
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Marketing strategy and planningA framework for strategic marketing and
planning
-
The firm and its environment –
Customer and competitor analysis
Week 37
Jacob Holm
Jacob.k.holm@gmail.com
Tlf: 24 42 11 32
www.office2go.dkwww.Office2go.dk
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Hold roderi……..
Hold A Hold B Hold C
Tirsdag 15.20 – 17.10 Torsdag 8.00 – 9.40 Tirsdag 8.00 – 9.40D1V089 SP216 D1V001
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The marketing management processPart 1:Marketing Strategy
• Market –led strategic management – chapter 1
• Strategig marketing plannng
Part 2: Competitive market analysis• The changing market environment – chapter 3
• Customer analysis – chapter 4
• Competitor analysis - chapter5
• Understanding the organizational resource base – chapter 6
• Forecasting future demand and market requirements – chapter 7
Part 3: Identifying current and future competitive positions
• Segmentation and positioning principles – chapter 8
• Segmentation and positioning research – chapter 9
• Selecting target markets– chapter 10Part 4: Competitive position strategies
• Segmentation and positioning principles – chapter 11
• Competing through the new marketing mix – chapter 12
• Competing trough innovation– chapter 13
• Competing through superior service and customer relationship – chapter 14
Part 5: Implementing the strategy• Strategic customer management – chapter 15
• Strategic alliances and network – chapter 16
• CSR – chapter 18 www.Office2go.dk
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MARKOPS GRUPPER – Deadline mandag 24 sept
Sendes til jacob.k.holm@gmail.com
Product portfolio strategy, to decide which new projects proposed by R&D will be fully developed and brought to market
Segmentation and positioning strategies to determine which market segments will be targeted, and how products will be positioned
Marketing mix strategy to set day-to-day operational marketing decisions such as pricing, production, communication and distribution
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Today’s subject
Marketing Audit:
1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes, suppliers, distributors and suppliers – Porters five forces
3. Against whom are we competing and what market are we in – Porters value chain and value curves
4. Consumer analysis
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A bit inspiration before we start
The firm and its environment
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The organizations environment
1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes, suppliers, distributors and suppliers – Porters five forces
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1. Macroenvironment• What is the macroenvironment
– Demographic, Socio cultural, Physical, Political/Legal, Economic and Technological.
“like mosquitoes or cooling breezes on a humid summer evening, trends will always be present, whether marketing managers like them or not. The question is what managers can do about them”. -
- Mullins, Walker, Boyd, Larréche (fifth edition -page 68)
• Do we have any influence on these trends?– Depends on the size and willingness to use the power.– Global multinational companies like Coca-cola, GM, Microsoft, Nestlé
have great influence.– Medium sized global or local companies like Zara, H&M, GAP in the
fashion can have some influence.– Small local firms have typically no influence alone but will work through
interest organizations by lobbying.
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Demographic environment
• World perspective: – How is the demographic development in Europe, Asia, Africa, North
and South America.
• Regional perspective: – Ex. EU north contra south – new countries in the EU.
• National perspective:– Rural -> urban development
• Local perspectives:– Perspectives in the local communities
• Age – individual economic status – economic development, geographical placement and identity etc.
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Demographic environment
Hvordan udvikler markedet sig.
• Det grå guld
• Kvinder over 40
• Middelklassen
• Multietnisk samfund
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Sociocultural environment
The sociocultural environment represents the values, attributes, and the general behavior of the individuals in a given society.
• Shift or development/transformation in the structure of the society.
– Generation X – The rise of the creative class – individual values– Family structure– Immigration
• Higher educated, postponing marriage, delaying having children.
• Different from country to country– Denmark is a homogeneous country – it’s hard to immigrate to– US is a multicultural country where it’s easier to get integrated
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Economic environment
• The economic performance of a country is measured by Gross domestic product (GDP)– GDP is defined as the total value of final goods and services
produced within a territory during a specified period (or, if not specified, annually, so that "the UK GDP" is the UK's annual product). GDP differs from gross national product (GNP) in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it.
– GDP = consumption + investment + exports − imports
– Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector spending => GDP = private consumption + government + investment + net exports
– To compare countries we measure it normally on per-capita basis.
– The problem is that we don’t measure the purchasing power – only the countries productivity !
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Economic environment• Big Mac index
– In the Big Mac index, the "basket" in question is considered to be a single Big Mac as sold by the McDonald's fast food restaurant chain.
– The Big Mac index was introduced by The Economist newspaper in September 1986 and has been published by that paper more or less annually since then. The index also gave rise to the word Burgernomics.
• Tall Latte index– In January 2004, The Economist
introduced a sister Tall Latte index. The idea is the same, except that the Big Mac is replaced by a cup of Starbucks coffee, acknowledging the global spread of that chain in recent years
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Economic environment
• Factors that are important for the economic environment– Interest rate
– Net income level (after taxes)
– Unemployment level
– Future economic forecast – national and international
• Example - Demand in Denmark– Interest rates low – mortgage interest is app. 0,3 %
– Housing prices are high (Copenhagen area)
– Unemployment low
– Net income are rising after tax cuts by the government
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Political/legal environment
• In every country there is a legislative or regulatory environment within firms must operate.
• Political risks of confiscation, expropriation or domestication.
• Risks of: Import/export restrictions – Taxations - Price control
• Copyright og protection of intellectual property
• Government regulations – Typically on price product, promotion and distribution – EU favors multinational companies compared to small local companies
• Government deregulation – telecommunication, air travel etc.
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Technological environment
• What is the technological level in the country, region etc.
• "I think there is a world market for maybe five computers”-- Thomas John Watson, Sr. (1874-1956), American businessman, president of IBM
• Skype found a new way of phoning – the company was sold to eBay for approximately $2.6 billion
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Globalisering
• Globalisering – det er her og bliver ”værre” eller ”bedre og bedre”
• Ikke mere lavtløns job der udflyttes nu også højtløns jobs.
• Dem som kan udnytte mulighederne er verden ”lille”
”At the same time as markets are becomming more global, so the destinct of market segments is becomming clearer. The most succesful firms are those that have recognised this incraesing importance of segmentation and positioned their companies so as to take best advantage of it” - side 64
• Verden bliver mere og mere uforudsigelig
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The organizations environment
1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes, distributors and suppliers – Porters five forces -
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2. Micro environment Porters five forces
Market definition
Industry competitors
Determine intensity &
attractiveness?
SuppliersPower etc.
BuyersPower etc.
New entriesThreats & attractiveness, competence
SubstitutesRelative price,
switching cost etc.
What determine attractiveness (high
profit)?
= Barrierswww.Office2go.dk
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Markets and industry definition
What is the relevant market………….
The relevant market definition depends on what you want to investigate – and you often need to see the market from different perspectives.
Generic categories
Product class Product group
Transportation
Cars, trains, busses, caps etc
Cars SUV
Communication
Mobile phone, Ord. phone, Email, Fax
Mobile phones 2G phones
Pictures Painting, photo, decoration
Photo Digital photo
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Rivals
Consumer
Supply
Sub.
New
entries
Understanding market positioning
Where are the barriers ?
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Exit barriers
En
try b
arr
iers
Low HighLow
Hig
h
Low stable returns
Service industry
Low, risky returnsPolluting industries
High stable returnsShipping
High, risky returnsIT, Medico, software
Understanding barriersMarket conditions
Trend = breaking barriers (ie ”indre marked & globalisation”)
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Exit barriers
En
try b
arr
iers
Low HighLow
Hig
h
Understanding barriersMarket conditions
Entry barriers:
High capital requirements, economies of scale, patents, licensing requirements, scarce location, raw materials, distributors,
Exit barriers:
Legal or moral obligations to customers, creditors and employees, government restrictions, low asset salvages value due to overspecialization or obsolescence, high vertical integration and emotional barriers.
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Competitive forces
Bargaining power of suppliers
Threat of new entrants
Rivalry among existing firms
Bargaining power of buyers
Threat of substitute
prod.
Rivalry is greater when:
• There is high investment intensity. - Ex. Airlines
• Many small firms exist, no dominant firm – ex restaurants
• There is little perceived prod. Differentiation – ex car tires
• It is easy for customers to change suppliers – ex phone companies
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Competitive forces
Bargaining power of suppliers
Threat of new entrants
Rivalry among existing firms
Bargaining power of buyers
Threat of substitute
prod.
Entry is more difficult when:
• Strong economies of scale are present. – Ex. Shipping
• High capital requirements – ex 3G mobile technology
• When product differentiation exists – ex Cirque-Du-Soleil
• When it is difficult gaining distribution – ex Paint market
How strong are the barriers
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Competitive forces
Bargaining power of suppliers
Threat of new entrants
Rivalry among existing firms
Bargaining power of buyers
Threat of substitute
prod.
Threat of substitute prod are higher when:
• Alternative products perform the same function.
• New inventions can be produced cheaper and solve the buyers need.
How strong are the barriers
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Competitive forces
Bargaining power of suppliers
Threat of new entrants
Rivalry among existing firms
Bargaining power of buyers
Threat of substitute
prod.
The effect is normally seen through prices – high supplier power is seen when:
• Limited number of suppliers
• High switching cost
• Realistic threat of forward integration
• Suppliers product is a large part of buyer’s production.
• There is a high cost in changing suppliers – ex microsoft
Who has the bargaining power ?
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Competitive forces
Bargaining power of suppliers
Threat of new entrants
Rivalry among existing firms
Bargaining power of buyers
Threat of substitute
prod.
Bargaining power is increased when:
• The extent of buyer concentration. – Ex. Wall-mart
• Low switching cost – ex TDC >< Telmore
• Threat of backward integration
• The product is of low importants to the buyer
• Buyers profitability is low – will create a more aggressive bargaining.
Who has the bargaining power ?
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Porters five forcesMarket definition
Industry competitors
Determine intensisity & attractivenes
s?
SuppliersPower etc.
BuyersPower etc.
New entriesThreats & attractiveness, competence
SubstitutesRelative price,
switching cost etc.
PEST
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Porters værdikæde
• Hvorfor værdikæde analyse?– Hvor skaber vi værdi – supply, production, customers– Hvor skaber konkurrenterne værdi– Hvor skal vi sætte ind– Hvordan måler vi styrker - værdikurver
Hvor skabes værdien www.Office2go.dk
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0
1
2
3
4
5
6
7
8
9
10
Price Speed Frills Numberedseats
Tickets Hub strategy
Customer needs
easyJet
BA
Ex: easyJetCompetitor analysis
Sco
re (
10
=im
port
ant
for
t he
c us t
om
er )
Customer success criteria
High
low
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Product life cycle - PLCMarket introduction stage: • cost high sales volume low • losses • high prices – skimming or
penetration• Innovators
Growth stage: • costs reduced due to economies
of scale - sales volume increases significantly
• profitability • prices to maximize market share • Early adaptors and majority
Mature stage: • costs are very low sales volume
peaks • prices tend to drop due to the
proliferation of competing products - very profitable
• Late majority – innovators are gone
Decline stage:• sales decline • prices drop (lower prices may
lead to lower value perception) • profits decline
Pre-relationship stage
The early stage
The Development stage
The long-term stage
The final stage
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The early stage
• Create awareness of the product / Brand• Trial with low commitment• Create a basic trust – all sales is based on trust!
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Product life cycle - PLCMarket introduction stage: • cost high sales volume low • losses • high prices – skimming or
penetration• Innovators
Growth stage: • costs reduced due to economies
of scale - sales volume increases significantly
• profitability • prices to maximize market share • Early adaptors and majority
Mature stage: • costs are very low sales volume
peaks • prices tend to drop due to the
proliferation of competing products - very profitable
• Late majority – innovators are gone
Decline stage:• sales decline • prices drop (lower prices may
lead to lower value perception) • profits decline
Pre-relationship stage
The early stage
The Development stage
The long-term stage
The final stage
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The development stage
• Increase marketing cost• Sign first order• You know need to prove your worth and build on the
initial trust– Service– Delivery on time– Accurate invoice– Follow up on mistakes or delays– After sales service
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Product life cycle - PLCMarket introduction stage: • cost high sales volume low • losses • high prices – skimming or
penetration• Innovators
Growth stage: • costs reduced due to economies
of scale - sales volume increases significantly
• profitability • prices to maximize market share • Early adaptors and majority
Mature stage: • costs are very low sales volume
peaks • prices tend to drop due to the
proliferation of competing products - very profitable
• Late majority – innovators are gone
Decline stage:• sales decline • prices drop (lower prices may
lead to lower value perception) • profits decline
Pre-relationship stage
The early stage
The Development stage
The long-term stage
The final stage
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The long-term stage
• Maintenance marketing cost• Creating a sort of “friendship” – anniversary or birthday
present.• Efficiency improvement in sales and marketing.
Reduced cost.• Orders over the phone or EDI• Maximum commitment – tough for competitors to steal
your customer, even if you price is higher! • CRM (Customer relationship management) systems• Database marketing through a club
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Product life cycle - PLCMarket introduction stage: • cost high sales volume low • losses • high prices – skimming or
penetration• Innovators
Growth stage: • costs reduced due to economies
of scale - sales volume increases significantly
• profitability • prices to maximize market share • Early adaptors and majority
Mature stage: • costs are very low sales volume
peaks • prices tend to drop due to the
proliferation of competing products - very profitable
• Late majority – innovators are gone
Decline stage:• sales decline • prices drop (lower prices may
lead to lower value perception) • profits decline
Pre-relationship stage
The early stage
The Development stage
The long-term stage
The final stage
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The final stage
• Total commitment from seller and buyer.• No doubt about the advantage of dealing with each
other• Invite to football matches, golf, vacations ect.But problems are coming!
• New developments are outmatching our
product
• Customers begin to disloyal
• If we don’t react it could have a long term
effect.
• Cipramil (Lundbeck)
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PLC – Product Life Cycle
Mange forskellige forløb – Kan være produktgrupper
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The Boston Matrix
Question mark
?
Stars
Dogs Cash Cows
Market Growth
Market Share
High
Low High
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Customers – who are they………..
And what can we learn from them…………………………
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Buying process
Problem identification
Information search
Routine or habitual purchase
Evaluation of alternatives.
Purchase
Post purchase eval.
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Decision making process
High Low
Extended (Info search, consideration of alternatives)
Complex decision making (Cars, homes, vacations)
Limited decision making, incl. Varity seeking making and impulse purchase
Habit/routine(Little or no info search)
Brand loyalty (Athletic shoes, milk, deodorant)
Inertia (frozen vegetables, Paper towels)
Extent of involvement
Exte
nt
of
an
aly
sis
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The evaluation processWhere can marketers influence the buying process
Problem identification
Information search
Routine or habitual purchase
Evaluation of alternat.
Purchase
Post purchase eval.
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Why are these areas of special interest to marketers
Problem identification
Information search
Routine or habitual purchase
Evaluation of alternat.
Purchase
Post purchase eval.
• Hard facts– Product– Price– Quality– Size– Technique
• Soft facts– Attitudes – Lifestyle– Brand attitudes– Social acceptability – Salespersons
involvement– Storytelling– Customer orientation
Marke
t rese
arch
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Customer Journeys
holm lund sørensen
”Customer Journeys”
Eksempel:Entre: 2 min – 55 kr
Forl. 1: 10 min – 0 kr
Forl. 2: 20 min – 25 kr
Rest 1: 20 min – 25 kr
Rest 2: 0 min – 0 kr
Andet: 20 min – 25 kr
Kult 1: 10 min - 25 kr
82 min – 155 kr
Entre: 2 min - 55 kr
Forl 1: 20 min - 25 kr
Forl 2: 15 min - 25 kr
Rest 1: 0 min - 0 kr
Rest 2: 15 min - 50 kr
Andet: 10 min - 25 kr
Kult 1: 10 min - 25 kr
72 min - 205 krStimuler merforbrug de rigtige steder!
• Storytelling• Watching customers
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Listening – not evaluating
• Storytelling• Watching customers• Meeting the customer• Customer days• Listening not evaluating:
Story from a leading computer company – IBM?
1. The lady that could not get the computer ”foot-pedal” to work and had to be told that the computer was not a sewing machine and to take the mouse of the floor.
2. People who phone and complained that their software says ”press any key”, but the keyboard has no key marked ”any key”, so there must something wrong with the keyboard.
The answer from the service people: ”read the ”flaming” manual........
No wounder that DELL and Apple has succes.........
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Complainers
StorytellingWatching customersMeeting the customerCustomer daysListening not evaluating:What about complainers
• Because we do not receive any customer complaint it dos not mean that all is well - do not confuse silent complainers with satisfied customers.
• Most dissatisfied customers do not complain to us – probably only 4-5 % bother
• Dissatisfied customers tell everyone but us
• Dissatisfied customers buy less
• Typically the cost of complaint resolution is 10-25 % of the cost of finding a new customer.
• Resolved complaint tends to become more loyal customers.
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Today’s subject
Marketing Audit:
1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes, suppliers, distributors and suppliers – Porters five forces
3. Against whom are we competing and what market are we in – Porters value chain and value curves
4. Consumer analysis
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Jacob HolmTlf: 24 42 11 32
Email:jacob.k.holm@gmail.dk
www.office2go.dk
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