Finance and Marketing

Lecture 2

Masters
Engineering routes
 Week 2
• The micro environment
o Competitors
o Customers and their behaviour
o Suppliers
o Distributors
• Internal (organisational) audit
o The organisation’s strengths & weakness
o Resources available
o Current strategy
 The Marketing Audit

Macro-environment

Economic Political
Micro-environment

Suppliers Customers
COMPANY Legal

Distributors Competitors

Sociological Environmental

Technological

Adapted from Jobber

Analysis of competition…
• Provides an understanding of your competitive
position relative to competitors
• Help generate insights into competitive
strategies
• Generate insights into competitive capabilities

Gives an informed basis for developing future strategies to

establish or sustain advantages over competitors

Gilligan and Wilson (2003)

5 competitor analysis questions:

1. Who are we competing against?

Industry versus market views
2. What are their objectives?
3. What strategies are they pursuing (and how
successfully?)
4. What strengths and weaknesses do they have?
5. How are they likely to behave in the future?
Firms compete to meet needs with value
Value Underlying Direct Indirect
proposition need competitors competitors

Overseas Relaxation Rival tour Garden furniture

holiday operators
Restaurant Social Other Meal at home
meal gathering restaurants
TV Entertainment Other TV Internet Service
Programme programmes Provider

Parker Pen Gift giving Other pens Any other gift

Palmer 2000
So, who are we competing
against?

DIRECT INDIRECT

Mercedes C Class Ford Focus

GENERIC BUDGETARY

Rental car, train Phillippe Patek watch

5 FORCES OF COMPETITIVE INTENSITY
Threat of
new
entrants

Threat of Competitive Supplier

substitutes rivalry power

Buyer
power
Porter (1990)
 The Trap Of The Competitive Box
The Competitive Box

The Usual Suspects

Known competitors operating in
traditional ways with a known
customer base and competing
for the same market share
New Competitors New Business
Models
Conventional value
propositions
Superior Superior
value value

Customers
What Business Are We In?

To avoid ‘Marketing Myopia’

companies should define their
business in terms of inherent
customer need NOT the products
they make

Marketing Myopia, Levitt(1960)

 “People don’t buy products,
they buy solutions” - Webster (1997)

Move away from a product

focused view of your market
and your competitors
Understanding The Customer
Analyse the Buying Behaviour & Process

Identify the various criteria by which buyers

choose one supplier / brand over another
(CCFs)

Segment the market by grouping together

buyers who have similar choice criteria

Identify the Benefit Solution required

by each segment
 Types Of Buyers
Individual Industrial
buying for customer
own use

Intermediary
Individual buying
eg. Retailer
for others
 B2C and B2B
Consumer Buying (B2C)
Purchases made for private use
(individual or household consumption)

Organisational Buying (B2B)

Purchases made on behalf of
businesses & organisations
 Consumer Buying Behaviours
Frequency Familiarity Expense

 Routine Buying
 Limited Decision Making
 Extensive Decision Making
 Impulse Buying
R I S K
Consumer Buying Decision Process

Problem Recognition

Information Search

Routine Purchases
Evaluation of Alternatives

Purchase

Post-Purchase Evaluation
Characteristics Of Organisational Buying

 Generally fewer customers making larger,

more complex purchases
 Buyer & seller often form relationships
 Terms are negotiated
 Decision is often influenced by a number
of people in the organisation who form the
Decision Making Unit (DMU) for that
purchase.
 The Decision Making Unit (DMU)

Initiator
Influencers
Users
Buying
Decision

Buyer Decider

To influence the purchasing decision we must understand

the role played by members of the DMU
Internal Analysis

•Resources /capabilities
•Current offerings planning
•Previous Performance and
•Business Relationships Performance of
•Key issues value propositions

Adapted from Wood – Marketing Planning – principles into practice 2004

Resources and Capabilities

Human Informational
Resources Resources

Financial Supply
Resources Resources

Adapted from Wood – Marketing Planning – principles into practice 2004

 Current value offerings
• Composition of product mix and product lines
• Product and line sales, market share
• Customer needs satisfied by features and
benefits
• Customer satisfaction
• Product pricing and profitability
• Position on life cycle
• Links to other products
• Contribution to organisational performance
Adapted from Wood – Marketing Planning – principles into practice 2004
Previous performance
• Sales
• Profit
• Marketing Plans
• Acquisition, retention,
loyalty
• Costs

Adapted from Wood – Marketing Planning – principles into practice 2004

Business relationships
• Suppliers,
Distributors, partners
• Internal relationships
• Changes over time
• Dependence

Adapted from Wood – Marketing Planning – principles into practice 2004

 Strengths and weaknesses
"He who knows others is wise;
he who knows himself is enlightened.”
Lao Tzu

Analyse objectively
Self awareness
Critical analysis
 S W O T Analysis

Strengths Weaknesses
(internal) (internal)

Opportunities Threats
(External) (External)
 TOWS Matrix
INTERNAL STRENGTHS WEAKNESSES
FACTORS (List 5-10 internal (List 5-10 internal
strengths here) weaknesses here)
EXTERNAL
FACTORS

OPPORTUNITIES SO Strategies WO Strategies

Generate strategies Generate strategies
(List 5-10 external here that use strengths here that take
opportunities to take advantage of advantage of
here) opportunities opportunities by
overcoming
weaknesses

THREATS ST Strategies WT Strategies

Generate strategies Generate strategies
(List 5-10 external here that use strengths here that minimise
threats here) to avoid threats weaknesses and avoid
threats

Weihrich, H.; 1982; "The TOWS Matrix - A Tool for Situational Analysis" reprinted from 'Long Range Planning', April 1982; p60