CHAPTER FOUR

ANALYZING THE MARKET, CUSTOMERS & COMPETITION

 FORMULATING A SUCCESSFUL MARKETING
PLAN
 PREPARING THE MARKETING ANALYSIS AND
PLAN

 DEFINING THE MARKET SEGMENTATION

 CONDUCTING A COMPETITIVE ANALYSIS

 PREPARING THE PRICE AND SALES

STRATEGY

 PENETRATING THE MARKET AND SETTING

UP SALES CHANNELS
FORMULATING A SUCCESSFUL MARKETING PLAN

 Set Marketing Objectives

 Get the Product Out: Sales & Distribution

 Raise Visibility: Advertising, Public

Relations, & Promotions

 Conduct a Site Analysis

 Future Marketing Activities
PREPARING THE MARKETING ANALYSIS AND PLAN

 Identifying Customers

 Niche or Target Markets

 One-to-One Marketing

 The Value of Loyalty Programs

PREPARING THE MARKETING ANALYSIS AND PLAN

 Identifying Customers

• Market Identification
• Current & Best Customers
• Potential Customers
• Outside Factors

 Niche or Target Markets

PREPARING THE MARKETING ANALYSIS AND PLAN

 One-to-One Marketing

• Identify customers, or get them to identify themselves

• Link customers' identities to their transactions
• Calculate individual customer lifetime value
• Practice 'just-in-time marketing‘
• Strengthen a customer-satisfaction program
• Treat complaints as opportunities for additional business
• Survey customers to find their 'points of pain‘
• Enhance product information
PREPARING THE MARKETING ANALYSIS AND PLAN

 The Value of Loyalty Programs

• Profit derived from increased purchases

• Profit from reduced operating costs
• Profit from referrals to other customers
• Profit from price premium
DEFINING THE MARKET SEGMENTATION

 Demographic Segmentation
 Geographic Segmentation

 Psychographic Segmentation

 Ethnic Segmentation

 Combination Segmentation
 Questions for Effective Segmentation
DEFINING THE MARKET SEGMENTATION

 Questions for Effective Segmentation

• Do potential customer groups have different needs?

• Does meeting customer needs require different
capabilities than meeting the needs of other customers?
• Can the customers fit into a given segment be identified?
• Are customers both willing and able to pay?
• Is the Segment large enough to be profitable?
• Can the Segment be reached in a cost-effective manner?
• Can the segment be influenced to respond favorably?
CONDUCTING A COMPETITIVE ANALYSIS

 Product OR Service
 Price

 Industry Competitors

 Selling/Promotions

 Management
 Financial
CONDUCTING A COMPETITIVE ANALYSIS

 Product OR Service
• How is the competitive product or service defined?
• How is it similar or different?
• Does the competition cater to a mass or targeted
market?
• What features of the product are superior?
• What strengths or weakness of the competition can be
exploited?
CONDUCTING A COMPETITIVE ANALYSIS

 Price
• What is the competitor's pricing strategy?
• Is the competitor's price higher or lower?
• What is competitor's gross margin for similar
products?
• Does the competitor offer terms, discounts, or
promotions?
CONDUCTING A COMPETITIVE ANALYSIS

 Industry Competitors

 Define the competition in terms of new, Internet, or

potential threats of existing companies.
 What are the strengths and weakness of each?
 How will e-commerce companies affect the
business?
 How can the suppliers or buyers affect the
competition?
CONDUCTING A COMPETITIVE ANALYSIS

 Selling/Promotions

 How do the competitors advertise? Analyze their

Websites?
 How much do the competitors spend on advertising,
Web development, and promotions?
 What marketing vision or plan are the competitors
selling?
CONDUCTING A COMPETITIVE ANALYSIS

 Management

 How strong is the competitor's management team?

 How does the company recruit new key
employees?
 What is the team's background or experience?
 How does the company compensate their
employees?
CONDUCTING A COMPETITIVE ANALYSIS

 Financial

 Is the competitor profitable?

 What volume are sales and market shares?
 Do they spend money for R&D, Internet, and Web
development?
 Are they properly capitalized? How strong is their
cash flow?
PREPARING THE PRICE AND SALES STRATEGY

 Pricing Methods

• Value
• Rationale
• Calculating Breakdown Points

 Establishing Pricing Objectives

• Revenue-oriented
• Operations-oriented
• Patronage-oriented
PENETRATING THE MARKET AND SETTING UP SALES CHANNELS

 Direct Salesforce
 Sales Agents

 Trade Shows