External Analysis :

Customer Analysis
Chapter 3
External Analysis
Should start with
◦ Customer Analysis
And includes
◦ Competitor Analysis
◦ Market Analysis
◦ Environmental Analysis
The external analysis process should not be an end in
itself.
Rather, it should be motivated throughout by a desire to
affect strategy, to generate or evaluate strategic options.
 External Analysis
FIGURE 1.1. The Role of External Analysis

Strategic
Decisions
External • Where to compete
analysis • How to compete
• Bases of competition

Identification
•Trends/future events
•Threats/
Analysis
• Information-need
opportunities
•Strategic questions areas
• Scenario analysis

Chap-3 Customer
04/29/2022 3
External Analysis
An external analysis can contribute to strategy
indirectly by identifying
Significant trends and future events.
Threats and opportunities.
Strategic questions, key areas of uncertainty that could
affect strategy outcomes.
Strategic Questions
A strategic question, a particularly useful concept in
conducting an external analysis, involves an area of
uncertainly that has the potential to affect strategy.
 External Analysis
There are three ways of handling that
uncertainly as suggested below:
a)To Expedite decisions uncertainties
should be reduced –
b)Info. acquisition reduces uncertainties
and associated risks -
c)The uncertainly could be modeled by
a scenario analysis.
External Analysis
A scenario is an alternative view of the future
environment that is usually prompted by an
alternative possible answer to a strategic
question or by a prospective future event or
trend.
 What would happen if the banking sector is open to
Global market ?
 What would happen to local brand hotels as more and
more International chain hotels come to Ethiopia?
 Such a question could be the basis for a positive and
a negative scenario
Customer Analysis
◦ In most strategic market-planning
contexts, the first logical step is to
analyze the customers.
◦ Customer analysis consists of
addressing the three sets of strategic
questions shown below.
 i. Segmentation
Who are our customers? Who are the most

important ones?
How can we segment them into logical

groups ?
What customized offer could we offer to

satisfy specific customers’ needs?

 Basis of segmentation
 Geographic
 Ex. Local market vs. International markets; main cities vs. rural towns
 Type of organization
 Public, private, international institutions,
 Customer type
 Final consumers vs industrial customers
 Lifestyle
 Jaguar buyers tend to more adventurous, less conservative than buyers of Mercedes-Benz
and BMW
 Sex
 Spa for ladies gym for gents
 Age
 Cereals for children versus adults
 Occupation
 The suit needs of lawyers versus musicians
 Benefit Segmentation
If there is a “most useful” segmentation variable, it would
be benefits sought from a product, because the selection of
benefits can determine a total business strategy.
For example A restaurant or food complex, can segment
its market on customers’ benefit into buyers who are:
 Calorie-conscious,
 Those Who Focus On Nutrition and Health,
Those Interested In Taste, and
 The Price-conscious Buyers.
Each segment implies a very different strategy.
 Application segmentation
The market might be segmented based the
specific reason why customers’ buy the
product:
A car manufacturer might have different
segments:
◦ Sedan- Automobile domestic & city driving
◦ SUV- off the road out of town driving
◦ Pickup- mostly for business
◦ Sport cars- speed driving
◦ Luxury cars- class oriented
ii. Customer Motivation
What exactly customers want / why do
customers’ prefer our brand?
What elements of the product/ service do
customers value most?
What are the customers’ objectives/ inner
needs?
What are they really buying?
How do segments differ in their motivation
priorities?
What changes are occurring in customer
motivation?
 Motivation for airline customers
Customer type Motivation

Business Reliable service,

convenient schedules,
easy-to-use airports,
frequent-flyer programs,
and comfortable service
Vacationers Price, flexible schedules
Customers’ Active Partnership
 Customers are increasingly becoming
partners in the buying process, rather than
passive targets of product development and
advertising.
Encourage active dialogue
Mobilize customer communities
Manage customer diversity
Co-creating personalized experiences/
beyond customization
 iii. Unmet needs
What are the gaps we haven’t filled yet?
Why are some customers dissatisfied?
Why are some changing brands or suppliers?
What are the severity and incidence of consumer
problem?
What are unmet needs that customers can identify?
Are there some of which consumers are unaware?
Do these unmet needs represent leverage points
for competitors?
Unmet…
An unmet need is a customer need that is not being
met by the existing product offerings.
For example, small portable antenna to replace
satellite dish,
 Chocolate and sweets with lower calories ( not
causing health problem)
 Less demanding academic program with reputable
degree
Audible books
 An unmet need for used personal computers.
 Identifying Unmet needs
Customers’ Survey
Customers are a prime source of unmet needs.
Identify the actual product experiences &
expectation
Are there problems with the total-use system in
which the product is embedded?
How can product be improved?
From Unmet Needs to New products.
Sometimes customers will bring new product
ideas
 Identifying Unmet…
Ask lead users
◦ Test market
◦ Those having first experience with the product/ service
might give info. as to how the product / service could
be improved
R&D
◦ Use creative thinking
◦ Imagine how would the users experience be improved
if the product could be renovated
◦ Invention, Imitation/ modification, duplication,
extension, synthesis ( combine two or more products)