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MARKETING STRATEGY

Lecture 4

STRATEGIC ANALYSIS:
MARKET, ENVIRONMENTAL & INTERNAL

IIPM Bangalore
Faculty: Srikanth Gururaj

Strategic Analysis
External Analysis
Customer
 motivations, segments

Internal Analysis
Performance
 profitability, sales, cust. sat., talent

Competitor
 strategy, costs, strengths

Track Record
 past strategies, financial resources, competencies

Market
 size, growth, profitability, distribution

Strengths Weaknesses

Environment

Opportunities  technology, govt., cultural, demographic Threats

SWOT

What’s the Best Strategy?

growth.. cust. costs. govt.. distribution  technology. financial resources. strengths Market Environment  size. profitability. segments Strategic Uncertainties Opportunities Threats Competitor  strategy. sat. sales. Weaknesses competencies .Strategic Uncertainties   Strategic Decisions External Analysis Customer  motivations. talent What’s the Best Strategy? OR Strategic Decisions Strengths Track Record  past strategies. cultural. demographic Internal Analysis Performance  profitability.

how fast .now (leader?) .HD content v. Bling…) Invest in sedans? Logan They did scooters .at what affordability levels .Strategic Uncertainties  Decisions Strategic Uncertainties AIRTEL Will HD be accepted / penetrate? . TV sets (chicken/egg) Will African growth in basic cell faster than Indian HD? Will vertical integration increase customer loyalty? Strategic Decisions Do we invest in HD? .later (follower?) MAHINDRA Will SUVs hold their place in consumer preferences? Losing “lifetime value?” A N A L Y S I S Where do we focus? Sell handsets? (Multiple locals: Micromax. Karbonn. Lemon.

Customer Analysis Customer Analysis can be examined in 3 key areas: 1) Segmentation (slides 6-15 … review of Brand Mgmt. 18) (part of segmentation) 3) Exploration of Unmet Needs (slide 20) (also part of segmentation) All 3 are inter-related. with segmentation being all encompassing & seminal .) 2) Customer Motivations (slides 17.

Competitor Analysis New / Potential Competitors • Market Expansion: • Product Expansion: • Backward/Forward: Integration • Acquire SCA Geographies Prince balls Rackets  shoes  ? supplier / customer enter CCD (Coffee) / Mahindra buys Reva .

Growth Profitability Brand Equity & Positioning Current & Past Strategies Cost Structures Exit Barriers .Competitor Analysis Understanding Competitors Build a “Scorecard or “Progress/Monitoring Report” Size.

opportunities . threats. potential participants • market attractiveness 2) Understand market dynamics: • key success factors.Market Analysis Why do we do it? 1) Make strategic judgments about: • a market / sub-market • current. trends.

Cost Structure 4. Size & Growth 2.Market Analysis Typical Dimensions of Market Analysis 1. Profitability 3. Distribution 5. Market Trends .

turning points. even PCs) Saturation/Penetration • declining markets – “experience curve” pricing . no price premiums Substitutes ( smart phones & cell phones.Market Analysis 1) Size & Growth: Questions / Considerations • rate. sophistication (value more than just “brand”). exciting) Buyer maturity. analogous industries? – – – – – Price pressures (over-capacity. “commoditization”) Category Stagnation (non-differentiation. nothing new. potential) • “too small” for the big players? • declining markets – “experience curve” pricing • indicators: leading indicators. submarkets (actual vs.

Market Analysis 2) Profitability Porter’s Five-Factor Model of Market Profitability (Industry Structure & Competitive Strategy) Potential Entrants Supplier Power COMPETITION – existing firms Customer Power Potential Substitutes .

forward 4.Market Analysis 2) Profitability: (Right question? Any higher-level question?) Porter’s Five Factors 1. resources. uniqueness? Level of fixed costs (overcapacity & pricing pressures?). staying power Points of differentiation. Competition: Current/Existing . relationships New entrants? Barriers. Supplier: concentrated and supplying diverse markets? Intel? . distribution? 2. Future/potential? – – – – – How many. scale. Exit barriers? Contracts. Substitutes: Ciscco telepresence 3. Customer : retail…Wal-Mart / travel…resorts / integrate back.

competitive response? Look at Value Chain to see where the “fat” or opportunities/threats lie? Air tickets – online // containers in 1950s – world trade // “ready-made” garments? 4) Distribution Systems: • • • Degree of “directness”…how many steps? New channels. phone/home-shopping 5) Market Trends: • • What’s changing? What’s important? Fads vs.Market Analysis 3) Cost Structure: • • Relative strategic degrees of freedom. cross-category . online. Trends = driven by demographics. door-to-door/direct/multi-tier / bundled / co-branded / telesales. long-term values. technology. innovation in channels? “Outlet” shops.

Market Analysis 2) Profitability Porter’s Five-Factor Model of Market Profitability (Industry Structure & Competitive Strategy) VARY BY INDUSTRY & MARKET Potential Entrants Supplier Power COMPETITION – existing firms Customer Power Potential Substitutes .

early 2000s & 10 yrs later in 2011-12. poor distribution (Roll your own cigarettes. moving sidewalks. WSJ from 1960-1979: 55% of growth forecasts fell short for various reasons: . (e-commerce.Market Analysis: Hot Growth Markets? can’t ignore! Many rush in.Overvaluation of technology. mobile VAS operators in India) Market. iPad) “Knock Offs”. home grocery delivery) . Fortune. iPhone. poor consumer demand. touted new products/markets from articles/forecasts in Business Week. tooth-decay vaccines. price cuts Superior Follower (Apple Newton  Palm Pilot  Blackberry  “Smart Phone”  Apple iPod. economy slows down Aggressive late entrants “buy” market share by dropping price Market leader/ incumbent fights back with new products. copies - All leads to Shakeout / consolidation… Academic Study of highly anticipated. cost barriers. dot.com of late 1990s. political issues.

The Competitive Life Cycle .

plan & act Low “Forget” it! 3 Monitor. analyze .Environmental Analysis One Step removed (higher level) than market analysis >>>>>>>>>>>>> Strategic uncertainties!       Technology Government Economics Culture Demographics Scenario Building IMMEDIACY ( how soon? ) Short-Term Long-Term High 2 Monitor. fast. analyze. contingencies 1 IMPACT ( how important ) Analyze deeply.

Internal Analysis “Know Thyself!” Understanding a business organization in-depth More information is available! Analysis based on: 1) Financial: Sales. Profits. Constraints and develop responsive strategies! . Costs 2) Organizational structure 3) Management style Identify organizational Strengths. Weaknesses.

Internal Analysis Satisfaction / Loyalty Quality Relative Costs CURRENT PERFORMANCE Innovation / New Products Employee Talent Pool L-T PROFITS .

Market size & growth rate .Management strength .Customer loyalty .Distribution structure .Opportunity to differentiate .Internal Analysis McKinsey matrix / GE matrix portfolio analysis model Market Attractiveness Competitive Strength Company / Product Line / Strategic Business Unit: .Relative brand strength (marketing) .Market share & share growth .Quality .Relative cost position -Relative profit margins .Finances .Technology development .Competitive intensity / rivalry .Distribution strength .Segmentation .Market profitability .Strength of assets and competencies .Production capacity .Demand variability .Technology / Innovation .Entry barriers .Pricing trends .

Internal Analysis McKinsey matrix / GE matrix portfolio analysis model COMPANY COMPETITIVE STRENGTH High Medium Low MARKET ATTRACTIVENESS High Invest / Grow Earn Selectively Medium Harvest / Divest Low .

lifestyle (both parents working) Tea demographics. Analysis: Kids Environ.News Items Remember … “Customer Analysis” is already presented in class! e-reading Market Analysis: Environ. Analysis: Upwardly Mobile Market Analysis: Environ. fad or not? Luxury Brands demographics. work styles import incentive finance community “pressure” financial resources Issues? . Analysis: Nestle global Internal Analysis Tiffany watches “Google Editions” distribution innovation . technology.

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