Chapter 3

MARKET OPPORTUNITIES ANALYSIS

AND CONSUMER ANALYSIS
MARKET OPPORTUNITY ANALYSIS AND
CONSUMER ANALYSIS

 Strategic marketing vs. tactical marketing

 Marketing environment
 Marketing research
 Consumer and organizational markets
 Segmentation, targeting, and positioning
The Strategic Marketing Process
 The strategic marketing process seeks to establish a
clear and concerted direction for all marketing activities of
an organization. It includes plans to reach specific
goals/objectives. The strategic marketing process is
depicted in the following diagram:
Step 1: Mission identification
The company's mission statement is articulated. A mission
statement defines what an organization is, why it exists, its
reason for being, its primary customers, the products and
services it produces, and its geographical area of operation.
For example, an international consumer goods company's
mission statement is "to provide branded products and
services of superior quality and value that improve the lives of
the world's consumers. As a result, consumers will reward us
with industry leadership in sales, profit, and value creation,
allowing our people, shareholders, and the communities in
which we live and work to prosper."
Step 2: Situation analysis
This step assesses and evaluates the market, customers,
competitors, and the company's internal and external environment. The
objective is to identify the company's strengths and weaknesses, as
well as the available opportunities and possible threats.

Step 3: Objective setting

Objectives are marketing targets that are Specific, Measurable,
Attainable, Realistic, and Time-bound (SMART). These enable a
company to control its marketing plan and provide a consistent focus
for all functions of an organization. These objectives include sales
revenues, market share, and profits. They are used as basis for
strategy selection and development.
Step 4: Marketing strategy development
The development of a marketing strategy involves
market segmentation, identification of target market,
positioning, selection of broad marketing strategies,
and the translation of strategies into action plans.
Strategies can be broadly classified into three
categories. These are cost leadership, differentiation,
and focused.
(Authors' note: Examples are hypothetical and for
academic purposes only.)
Cost Leadership

This is a strategy primarily for achieving low cost

leadership among industry competitors.
Cost leadership can be achieved through low cost
supply contracts, overhead expense control, economies of
scale, and comprehensive cost-cutting efforts, among
others.
Example: While 16" desk fans ordinarily retail for
P1,000.00, a local appliance brand is able to market the
same at P635.00 through mass production.
Differentiation

Differentiation seeks to achieve superior product

attributes and features that are different from
industry competitors. This results in pronounced
consumer preference for the company’s products.
Example: A mobile phone brand introduces its
version of the smartphone that does not have a
keyboard but is activated and controlled by thought.
Focused
Efforts are concentrated on a relatively small but
profitable market. The development of products and
services primarily ensures that the needs and wants of
this market are addressed and that satisfaction is
provided.
Example: A convenience store that concentrates on
the very high-end niche market by converting its
operations into convenience stores with superior
customer service, selling purely imported and high quality
products and gourmet food prepared by resident chefs.
Cost leadership, differentiation, and focused strategies may be implemented through
the following sub-categories of strategies:

1. Forward integration
This involves gaining ownership or increased control over distributors or retailers.
Example: A known newspaper company buying 418 newspaper stands in Metro
Manila

2. Backward integration
This involves gaining ownership or increased control over suppliers.
Example: A consumer goods company in the Philippines purchasing a cow farm and
dairy facility in General Santos City

3. Horizontal integration
This involves purchase of or increased control over competitors.
Example: A pizza company buying a controlling interest in another pizza
company
4. Market penetration
The objective of this strategy is to increase market share of current products or services
in current markets through greater and more intensive marketing efforts.
Example: A doughnut company launching a P56 million advertising campaign
directed at
current customers

5. Market development
This strategy involves the introduction of existing products or services into a new
geographical area or market.
Example: A private learning institution opening a campus in Cebu City

6. Product development
This strategy involves the improvement of current products or services or the
development of new products with the purpose of increasing sales.
Example: A company on carbonated beverages introducing its product line in tetra
pack
7. Related diversification
This involves introducing new but related products or services.
Example: Battery manufacturers introducing solar powered automotive
batteries

8. Unrelated diversification
This involves introducing new but unrelated products or services.
Example: A bank opening a chain of ice cream parlors

9. Retrenchment
This involves halting or reversing declining sales and profits through cost or
asset reduction.
Example: A shopping mall selling off its hardware department and laying
off 847 of its department store employees
10. Divestiture
This involves selling a division or part of an
organization.
Example: A conglomerate selling an airline

11. Liquidation
This involves selling all of a company's assets, in parts
or as a whole, for their tangible worth.
Example: A prime holdings company selling all its
companies
Step 5: Strategy evaluation and control
After the strategy is developed, periodic
monitoring and evaluation are needed. This
is necessary to identify deviations and make
necessary adjustments and corrections.
 The Tactical Marketing Process
Complementing the strategic marketing process, the tactical marketing
process determines the means or tactics to implement the strategies. It
involves the identification of specific activities, timetables, responsibilities, and
budgets and their implementation. The objective is to ensure that the
strategies are implemented successfully.
For example, a company determines to increase sales by 10% by
the end of the calendar year. After careful consideration, it selects
market penetration as its strategy. The current task is to identify the
tactics, or activities that it should undertake to ensure that the
strategy will be successful. The firm may decide to increase selling
prices. It may opt to do intensive promotions, or it may invest in
heavy product advertising. Once the tactics and activities are
identified, they are developed into an action plan.

An action plan is a sequential series of marketing activities. It

includes timetables for each activity, pinpointed responsibilities or
accountabilities for each, and the corresponding budgets.
Oftentimes, it is necessary to utilize two or more action plans to
ensure successful implementation. These are monitored regularly to
ensure effectiveness.