Contd.

Analyzing Consumer and Business Markets

on following Difference Basis:
Nature of Customers
Number of Customer
Nature of Demand
Product Analysis
Buying Considerations
Quantity of Purchase
Market Extension
Market Strategy

Nature of Demand
Consumers goods are directly demanded.

Therefore , the demand of consumer goods is

called autonomous demand.
Industrial goods are demanded indirectly .

Therefore, the demand of industrial goods is

called derived demand.

Product Analysis
The consumers of consumer goods are

generally not very well aware of comparative

merits and demerits of all products available
in the market. Therefore, they are unable in
the making very analytical study before they
purchase the goods.
The consumer of industrial goods are very

much aware of the merits and demerits of all

the products available in the market.
Therefore, they can do extensive and
intensive study.

Buying Considerations
For the purchase of consumer goods, the

buying consideration are price, utility,

durability, colour, design, packing etc.
For the purchase of industrial goods, the

buying considerations are- price, utility,

suitability and availability only. Generally
colour , design , packing, size etc. are not the
buying considerations for industrial goods.

Business Market vs. Consumer

Market
Business markets involve sales and purchases

of goods and services to various businesses,

governments and market intermediaries to
facilitate the finished product which is
generally then re-sold to an end user. In
contrast, consumer markets involve the
purchase and sale of goods and services to
consumers for their own use rather than for
resale.

Marketing and Customer

Value
The task of any business is to deliver

customer value at a profit. In a

hypercompetitive economy with increasingly
informed buyers faced with abundant choices,
a company can win only by fine tuning the
value delivery process and choosing,
providing, and communicating superior value.

The Value Delivery

Process

The traditional view of marketing is that the

firm makes something and then sells it.
Now instead of emphasizing making and
selling, Companies see themselves as part of
a value delivery process.

SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats

Market Opportunity Analysis (MOA)

Can the benefits involved in the

opportunity be articulated convincingly to

a defined target market?
Can the target market be located and
reached with cost-effective media and
trade channels?
Does the company possess or have access
to the critical capabilities and resources
needed to deliver the customer benefits?

Contd.
Can the company deliver the benefits better

than any actual or potential competitors?

Will the financial rate of return meet or
exceed the companys required threshold for
investment?

Opportunity Matrix and Threat Matrix

Conjoint Analysis
We measure consumer preference for alternative product

concepts with conjoint analysis, a method for deriving the

utility values that consumers attach to varying levels of
products attributes.
Conjoint Analysis has become one of the most popular
concept- development and testing tools. For example:
RPG Enterprises , for designing their super market chain
launched under the brand name FoodWold and later
changed to spencers- conducted market research using
conjoint analysis to understand the relative importance
of attributes such as location of the shop, extra facilities
like door delivery , credit facility, price , quality and so on.

Samples for Conjoint

Analysis

Utility Functions Based on Conjoint Analysis

Business Analysis
After management develop the product

concept and marketing strategy , it can

evaluate the proposal's business
attractiveness . Management needs to
prepare sales , cost , and profit projections to
determine whether they satisfy company
objectives. If they do , they concept can move
to the development stage . As new
information comes in , the business analysis
will undergo revision and exapansion.

Estimated Total sales

Total estimated sales are the sum of

estimated first time sales, replacement

sales, and repeat sales. Sales- estimation
method depend on whether the product is
purchased once ( such as an engagement ring
or retirement home), infrequently , or often.
For one time product , sales rise at the
beginning , peak , and approach zero as the
number of potential buyers is exhausted . If
new buyers keep entering the market , the
curve will not go down to zero.

Contd.
Infrequently purchased products- such as

automobiles , toasters , and industrial

equipment exhibit replacement cycles
dictated by physical wear or obsolescence
associated with changing styles , features ,
and performance . Sales forecasting for this
product category calls for estimating first
time sales and replacement sales separately .

Contd.
Frequently purchased products, such as

consumer and industrial nondurables , have

product life cycle sales resembling . The
number of first time buyers initially increases
and then decreases as fewer buyer are left .
Repeat purchases occur soon, product
satisfies some buyers . The sales curve
eventually falls to a plateau representing a
level of steady repeat purchase volume ; by
this time , the product no longer a new produ

Product Life Cycle Sales

for Three Product Types

Estimating Costs and

Profits
Costs are estimated by the R&D ,

manufacturing , marketing and finance

departments. For example: A five -year
projection of sales , costs, and profits for the
instant breakfast drink.
Row 1 shows projected sales revenue over the
five year period.
Row2 shows the cost of good sold which
hovers around 33 % of sales revenue.
Row 3 Shows the expected gross margin, the
difference between sales revenue and cost of

Contd.
Row 4 shows anticipated development

including product development cost ,

marketing research cost and manufacturing
development cost of good sold . And so on..

Projected Five-Year
Cash-Flow Statement (in thousands $)

Breakeven Analysis
Companies use other financial measures to

evaluate the merit of a new product

proposal . The simplest is breakeven analysis ,
which estimates how many units the company
must sell ( or how many years it will take ) to
break even with the given price and cist
structure . If management believe sales could
easily reach the break even number , it is
likely to move the project into product
development.

Risk Analysis
A more complex method of estimating profit is

risk analysis . Here, we obtain three estimate

( optimistic , pessimistic, and ,most likely ) for
each uncertain variable affecting profitability ,
under an assumed marketing environment
and marketing strategy for the planning
period. The computer simulates possible
outcomes and computes a distribution
showing the range of possible rates if returns
and their probabilities.

Analyzing Competitors
Once a company identifies its primary competitors ,

it must ascertain their strategies , objectives ,

strength , and weakness.
Strategies : A group of firm following same strategy

in a given target market is called a strategic group.

Suppose a company a wants to inter the major
appliance industry in united states. What is strategic
group. The company develops the chart shown in
below ppt discovers four strategic group based on
product quality and level of vertical integration .

Contd.

Objectives
Once a company has identified its main

competitors and their strategies , it must ask :

what is each competitor seeking in the
market place ? What drives each competitors
behavior?

Strength and
Weaknesses
A company needs to gather information about

each competitor's strengths and weakness .

Contd.
Share of Market The competitors share of

the target market.

Share of the mind The percentage of
customers who named the competitors in
responding to the statement, Name the first
company that comes to mind in this industry.
Share of heart The percentage of customers
who named the competitor in responding to
the statement , Name the company from
which you would prefer to buy the product.