CATEGORY, COMPETITOR & CUSTOMER ANALYSIS

1. Category Attractiveness Analysis

Deciding Factors
1.

Market Size Estimation

Industry Potential Market Potential Company Potential

2. 3. 4.

Aggregate Market factors Category Factors Environmental Factors

1.Market Size Estimation

Market Potential Estimate

Unrealized Potential

Company Sales Forecast

Industry Sales Forecast

Market Size Estimation

Sales (in 1000s of units) 900 800 700 600 500 400 300 200 100 0 2003

Market Potential Sales Forecast

Company XYZ Sales Forecast

2004

2005

2006

2007

2008

2009

2010

2.Aggregate Market Factors

Industry size, growth, and composition

Typical marketing practices

Industry changes that are anticipated consolidation trends, mergers, takeovers

Industry strengths and weaknesses Strategic alliances among competitors

2.Aggregate Market Factors

Market Size refers to the BCG matrix Market Growth - refers to the BCG matrix Stage in PLC Sales Cyclicity products tied closely to the business cycle- financial services, agriculture, real estate, automobiles etc. Seasonality consumption skewed in certain time of the year festivals, summers, wedding season etc Profits

3.Category Factors

Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Current category rivalry Pressure from substitutes Category Capacity

Threat of new entrants

Economies of scale Product differentiation Capital Requirements Switching costs Distribution channels

4.Environmental Factors

Political Economic Social Technological Regulatory/Legal

Category Rivalry

Many & Balanced competitors- fast-food, automobiles, Personal computers Slow Growth mature markets High Fixed costs- automobiles, chemicals, telecommunications- high exit barriers high competition Lack of product differentiation industrial markets intense competition

2.Competitor Attractiveness Analysis

DEFINING & ANALYZING COMPETITORS

1.Define Product-Market Boundaries and Structures

2.Identify and Describe End-Users

3.Analyze Industry & Value Added Chain

4.Evaluate Key Competitors

5.Forecast Market Size & Growth Trends

Product Market Boundaries & Structure

Determining Product-Market Structure

Start with the generic need satisfied by the product category of interest to management Identify the product categories (types) that can satisfy the generic need Form the specific product markets within the generic product market

1.

2.

3.

Matching Needs with Product Benefits

A product market matches people with needs to the product benefits that satisfy those needs

A product market is the set of products judged to be substitutes within those usage situations in which similar patterns of benefits are sought by groups of customers.

Illustrative Fast-Food Product-Market Structure

SUPER MARKETS FAST-FOOD MARKET
CONVENIENCE STORES
TRADITIONAL RESTAURANTS

MICROWAVE OVENS

Illustrative Product Market Structure

Food and beverages for breakfast meal

Generic Product Class Product Type

Cereals

Ready to eat
Natural Nutritional Regular Pre-sweetened

Variant A

Variant B

Life

Product 19

Special K

Brands

3. Analyze Industry & Value Added Chain

Extent of Market Complexity Three characteristics of markets:

1. Functions or Uses of the product
2. Enabling technology of the product 3. Customer segments in the product-market

Analyzing Competition
1. Define the Competitive
Arena for the Generic, Specific, and Variant Product Markets

4. Identify &
Evaluate Potential Competitors

PRODUCT MARKET STRUCTURE & MARKET SEGMENTS

2. Identify &
Describe Key Competitors

3. Evaluate Key
Competitors

Extent of Market Coverage

Current Capabilities

Competitor Evaluation

Customer Satisfaction

Past Performance

4. Analyze Key Competitor

Business scope and objectives Management experience, capabilities, and weaknesses Market position and trends Market target(s) and customer base Marketing program positioning strategy Financial, technical, and operating capabilities Key competitive advantages - access to resources, patents etc.

Competitor Analysis System

Analysis of Primary & Secondary data Comparing Market strategies of competition Key questions Who are they What are their competing product features What is their current strategy

Differential competitor advantage analysiswho has the competitive product advantage

Comparing Market strategies

Value chains Marketing Mix Technology Strategy Technology selection/specialization R&D investments Level of competence Competitive timing- initiates or responds

Product Features!!

Identify parallel needs coffee in an environment, McDonalds in Beijing Identify Purchase Patterns seasonality How customers use the product Pepsi in PET bottles Identify customer perception of risk Citibank credit cards for students, internet shopping with cash on delivery

Competitors Will

How critical/crucial is this product to the firm? How visible is the commitment to the market? How aggressive are the managers?

3.Customer Analysis

Identifying and Describing Buyers

Building Customer Profiles

DESCRIBING & ANALYZING END-USERS

How Buyers Make Choices

Environmental Influences

Identifying and Describing End-Users

Buyer characteristics in consumer markets:

Family size, Age, Income, Geographical location, Gender Occupation

Buyer factors in business markets:

Type of industry Type of products Company size Location

How Buyers Make Choices

Buying Decision Process
1.

Problem recognition Information search Alternative evaluation Purchase decision Post-purchase behavior

2.

3.

4.

5.

Environmental Influences

External factors influencing buyers needs and wants: Government, social change, economic shifts, technology etc. These factors are often non-controllable but can have a major impact on purchasing decisions

Building Customer Profiles

Start with generic product market

Move next to product- type and variant profiles >> increasingly more specific Customer profiles guide decision making segmenting, targeting, positioning etc.

Current & Potential Customers

Who buys & uses the productInitiator Influencer Decider Purchaser User

What customers buy &how they use it

Benefits Purchase pattern Product Assortment Use

Current & Potential Customers

Where Customers buy - channels When Customers buy usage patterns How Customers choose
Consideration set Steps in buyer behavior - attributes, perceptions

Why they prefer a product customer lifetime value

Customer Value of a Brand

Importance of Usage situations Effectiveness of product category in the situation Relative effectiveness of the brand in the situation

Sources of Customer Value

Economic Functional Psychological

Current & Potential Customers

How they respond to marketing programs? Will they but it again Satisfaction Satisfaction depends onExpectations of performance/quality Perceived performance/quality
Gap between expectations & performance