Cbs marketing audit and the market environment

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Marketing course at Copenhagen Business School

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Cbs marketing audit and the market environment

  1. 1. Marketing strategy and planning A framework for strategic marketing and planning - The firm and its environment – Customer and competitor analysis Week 37 Jacob Holm Jacob.k.holm@gmail.com Tlf: 24 42 11 32 www.office2go.dk1 www.Office2go.dk
  2. 2. Hold roderi…….. Hold A Hold B Hold C Tirsdag 15.20 – 17.10 Torsdag 8.00 – 9.40 Tirsdag 8.00 – 9.40 D1V089 SP216 D1V0012 www.Office2go.dk
  3. 3. The marketing management process Part 1:Marketing Strategy • Market –led strategic management – chapter 1 • Strategig marketing plannng Part 2: Competitive market analysis • The changing market environment – chapter 3 • Customer analysis – chapter 4 • Competitor analysis - chapter5 • Understanding the organizational resource base – chapter 6 • Forecasting future demand and market requirements – chapter 7 Part 3: Identifying current and future competitive positions • Segmentation and positioning principles – chapter 8 • Segmentation and positioning research – chapter 9 • Selecting target markets– chapter 10 Part 4: Competitive position strategies • Segmentation and positioning principles – chapter 11 • Competing through the new marketing mix – chapter 12 •Competing trough innovation– chapter 13 • Competing through superior service and customer relationship – chapter 14 Part 5: Implementing the strategy • Strategic customer management – chapter 15 • Strategic alliances and network – chapter 163 • CSR – chapter 18 www.Office2go.dk
  4. 4. MARKOPS GRUPPER – Deadline mandag 24 sept Sendes til jacob.k.holm@gmail.com Product portfolio strategy, to decide which new projects proposed by R&D will be fully developed and brought to market Segmentation and positioning strategies to determine which market segments will be targeted, and how products will be positioned Marketing mix strategy to set day-to-day operational marketing decisions such as pricing, production, communication and distribution4 www.Office2go.dk
  5. 5. Today’s subject Marketing Audit: 1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST 2. Micro environment actors – Customers, competitors, substitutes, suppliers, distributors and suppliers – Porters five forces 3. Against whom are we competing and what market are we in – Porters value chain and value curves 4. Consumer analysis5 www.Office2go.dk
  6. 6. A bit inspiration before we start The firm and its environment6 www.Office2go.dk
  7. 7. The organizations environment 1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST 2. Micro environment actors – Customers, competitors, substitutes, suppliers, distributors and suppliers – Porters five forces7 www.Office2go.dk
  8. 8. 1. Macroenvironment • What is the macroenvironment – Demographic, Socio cultural, Physical, Political/Legal, Economic and Technological. “like mosquitoes or cooling breezes on a humid summer evening, trends will always be present, whether marketing managers like them or not. The question is what managers can do about them”. - - Mullins, Walker, Boyd, Larréche (fifth edition -page 68) • Do we have any influence on these trends? – Depends on the size and willingness to use the power. – Global multinational companies like Coca-cola, GM, Microsoft, Nestlé have great influence. – Medium sized global or local companies like Zara, H&M, GAP in the fashion can have some influence. – Small local firms have typically no influence alone but will work through interest organizations by lobbying.8 www.Office2go.dk
  9. 9. Demographic environment • World perspective: – How is the demographic development in Europe, Asia, Africa, North and South America. • Regional perspective: – Ex. EU north contra south – new countries in the EU. • National perspective: – Rural -> urban development • Local perspectives: – Perspectives in the local communities • Age – individual economic status – economic development, geographical placement and identity etc.9 www.Office2go.dk
  10. 10. Demographic environment Hvordan udvikler markedet sig. • Det grå guld • Kvinder over 40 • Middelklassen • Multietnisk samfund10 www.Office2go.dk
  11. 11. Sociocultural environment The sociocultural environment represents the values, attributes, and the general behavior of the individuals in a given society. • Shift or development/transformation in the structure of the society. – Generation X – The rise of the creative class – individual values – Family structure – Immigration • Higher educated, postponing marriage, delaying having children. • Different from country to country – Denmark is a homogeneous country – it’s hard to immigrate to – US is a multicultural country where it’s easier to get integrated11 www.Office2go.dk
  12. 12. Economic environment • The economic performance of a country is measured by Gross domestic product (GDP) – GDP is defined as the total value of final goods and services produced within a territory during a specified period (or, if not specified, annually, so that "the UK GDP" is the UKs annual product). GDP differs from gross national product (GNP) in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it. – GDP = consumption + investment + exports − imports – Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector spending => GDP = private consumption + government + investment + net exports – To compare countries we measure it normally on per-capita basis. – The problem is that we don’t measure the purchasing power – only the countries productivity !12 www.Office2go.dk
  13. 13. Economic environment • Big Mac index – In the Big Mac index, the "basket" in question is considered to be a single Big Mac as sold by the McDonalds fast food restaurant chain. – The Big Mac index was introduced by The Economist newspaper in September 1986 and has been published by that paper more or less annually since then. The index also gave rise to the word Burgernomics. • Tall Latte index – In January 2004, The Economist introduced a sister Tall Latte index. The idea is the same, except that the Big Mac is replaced by a cup of Starbucks coffee, acknowledging the global spread of that chain in recent years13 www.Office2go.dk
  14. 14. Economic environment • Factors that are important for the economic environment – Interest rate – Net income level (after taxes) – Unemployment level – Future economic forecast – national and international • Example - Demand in Denmark – Interest rates low – mortgage interest is app. 0,3 % – Housing prices are high (Copenhagen area) – Unemployment low – Net income are rising after tax cuts by the government14 www.Office2go.dk
  15. 15. Political/legal environment • In every country there is a legislative or regulatory environment within firms must operate. • Political risks of confiscation, expropriation or domestication. • Risks of: Import/export restrictions – Taxations - Price control • Copyright og protection of intellectual property • Government regulations – Typically on price product, promotion and distribution – EU favors multinational companies compared to small local companies • Government deregulation – telecommunication, air travel etc.15 www.Office2go.dk
  16. 16. Technological environment • What is the technological level in the country, region etc. • "I think there is a world market for maybe five computers” -- Thomas John Watson, Sr. (1874-1956), American businessman, president of IBM • Skype found a new way of phoning – the company was sold to eBay for approximately $2.6 billion16 www.Office2go.dk
  17. 17. Globalisering • Globalisering – det er her og bliver ”værre” eller ”bedre og bedre” • Ikke mere lavtløns job der udflyttes nu også højtløns jobs. • Dem som kan udnytte mulighederne er verden ”lille” ”At the same time as markets are becomming more global, so the destinct of market segments is becomming clearer. The most succesful firms are those that have recognised this incraesing importance of segmentation and positioned their companies so as to take best advantage of it” - side 64 • Verden bliver mere og mere uforudsigelig17 www.Office2go.dk
  18. 18. The organizations environment 1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST 2. Micro environment actors – Customers, competitors, substitutes, distributors and suppliers – Porters five forces -18 www.Office2go.dk
  19. 19. Competition can be tough19 www.Office2go.dk
  20. 20. Competitor analysis20 www.Office2go.dk
  21. 21. 2. Micro environment Porters five forces Market definition New entries Threats & attractiveness, competence Industry competitors Suppliers Determine Buyers Power etc. intensity & Power etc. attractiveness? What determine Substitutes attractiveness (high profit)? Relative price, switching cost etc. = Barriers21 www.Office2go.dk
  22. 22. Markets and industry definition What is the relevant market…………. Generic Product class Product group categories Transportation Cars, trains, Cars SUV busses, caps etc Communication Mobile phone, Mobile phones 2G phones Ord. phone, Email, Fax Pictures Painting, photo, Photo Digital photo decoration The relevant market definition depends on what you want to investigate – and you often need to see the market from different perspectives.22 www.Office2go.dk
  23. 23. Understanding market positioning New Where are the barriers ? entries Supply Rivals Consumer Sub.23 www.Office2go.dk
  24. 24. Understanding barriers Market conditions Exit barriers Low High Low stable Low, risky Low returns returns Entry barriers Service industry Polluting industries High stable High, risky High returns returns Shipping IT, Medico, software Trend = breaking barriers (ie ”indre marked & globalisation”)24 www.Office2go.dk
  25. 25. Understanding barriers Market conditions Exit barriers Low High Entry barriers: High capital requirements, economies of scale, patents, Low licensing requirements, scarce location, raw materials, Entry barriers distributors, Exit barriers: Legal or moral obligations to customers, creditors and High employees, government restrictions, low asset salvages value due to overspecialization or obsolescence, high vertical integration and emotional barriers.25 www.Office2go.dk
  26. 26. Competitive forces Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers existing firms of buyers Rivalry is greater when: Threat of • There is high investment intensity. - substitute prod. Ex. Airlines • Many small firms exist, no dominant firm – ex restaurants • There is little perceived prod. Differentiation – ex car tires • It is easy for customers to change suppliers – ex phone companies26 www.Office2go.dk
  27. 27. Competitive forces Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers existing firms of buyers Entry is more difficult when: Threat of • Strong economies of scale are substitute prod. present. – Ex. Shipping • High capital requirements – ex 3G mobile technology • When product differentiation exists – ex Cirque-Du-Soleil How strong are the barriers • When it is difficult gaining distribution – ex Paint market27 www.Office2go.dk
  28. 28. Competitive forces Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers existing firms of buyers Threat of substitute prod are higher when: Threat of substitute prod. • Alternative products perform the same function. • New inventions can be produced cheaper and solve the buyers need. How strong are the barriers28 www.Office2go.dk
  29. 29. Competitive forces Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers existing firms of buyers The effect is normally seen through prices – high supplier power is seen Threat of when: substitute prod. • Limited number of suppliers • High switching cost • Realistic threat of forward integration • Suppliers product is a large part of Who has the bargaining power ? buyer’s production. • There is a high cost in changing suppliers – ex microsoft29 www.Office2go.dk
  30. 30. Competitive forces Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers existing firms of buyers Bargaining power is increased when: Threat of • The extent of buyer concentration. – substitute prod. Ex. Wall-mart • Low switching cost – ex TDC >< Telmore • Threat of backward integration • The product is of low importants to the Who has the bargaining power ? buyer • Buyers profitability is low – will create a more aggressive bargaining.30 www.Office2go.dk
  31. 31. Porters five forces Market definition New entries Threats & attractiveness, competence PEST Industry competitors Suppliers Determine Buyers Power etc. intensisity & Power etc. attractiveness? Substitutes Relative price, switching cost etc.31 www.Office2go.dk
  32. 32. Competitor analysis32 www.Office2go.dk
  33. 33. Porters værdikæde • Hvorfor værdikæde analyse? – Hvor skaber vi værdi – supply, production, customers – Hvor skaber konkurrenterne værdi – Hvor skal vi sætte ind – Hvordan måler vi styrker - værdikurver33 Hvor skabes værdien www.Office2go.dk
  34. 34. Eks: Møbelbranchen34 www.Office2go.dk
  35. 35. Ex: easyJet Competitor analysisHigh 10 9 8 7 6 Customer needs 5 easyJet BA 4 3 2 1 0 Price Speed Frills Numbered Tickets Hub strategy seatslow35 www.Office2go.dk
  36. 36. How long does products live ?36 www.Office2go.dk
  37. 37. Market introduction stage: Product life cycle - PLC •cost high sales volume low •losses •high prices – skimming or penetration •Innovators Growth stage: •costs reduced due to economies of scale - sales volume increases significantly •profitability •prices to maximize market share •Early adaptors and majority Mature stage: •costs are very low sales volume peaks •prices tend to drop due to the proliferation of competing products - very profitable •Late majority – innovators are gone Pre- The early The The long- The final Decline stage: relationship stage Development term stage •sales decline stage stage stage •prices drop (lower prices may lead to lower value perception) •profits decline37 www.Office2go.dk
  38. 38. The early stage • Create awareness of the product / Brand • Trial with low commitment • Create a basic trust – all sales is based on trust!38 www.Office2go.dk
  39. 39. Market introduction stage: Product life cycle - PLC •cost high sales volume low •losses •high prices – skimming or penetration •Innovators Growth stage: •costs reduced due to economies of scale - sales volume increases significantly •profitability •prices to maximize market share •Early adaptors and majority Mature stage: •costs are very low sales volume peaks •prices tend to drop due to the proliferation of competing products - very profitable •Late majority – innovators are gone Pre- The early The The long- The final Decline stage: relationship stage Development term stage •sales decline stage stage stage •prices drop (lower prices may lead to lower value perception) •profits decline39 www.Office2go.dk
  40. 40. The development stage • Increase marketing cost • Sign first order • You know need to prove your worth and build on the initial trust – Service – Delivery on time – Accurate invoice – Follow up on mistakes or delays – After sales service40 www.Office2go.dk
  41. 41. Market introduction stage: Product life cycle - PLC •cost high sales volume low •losses •high prices – skimming or penetration •Innovators Growth stage: •costs reduced due to economies of scale - sales volume increases significantly •profitability •prices to maximize market share •Early adaptors and majority Mature stage: •costs are very low sales volume peaks •prices tend to drop due to the proliferation of competing products - very profitable •Late majority – innovators are gone Pre- The early The The long- The final Decline stage: relationship stage Development term stage •sales decline stage stage stage •prices drop (lower prices may lead to lower value perception) •profits decline41 www.Office2go.dk
  42. 42. The long-term stage • Maintenance marketing cost • Creating a sort of “friendship” – anniversary or birthday present. • Efficiency improvement in sales and marketing. Reduced cost. • Orders over the phone or EDI • Maximum commitment – tough for competitors to steal your customer, even if you price is higher! • CRM (Customer relationship management) systems • Database marketing through a club42 www.Office2go.dk
  43. 43. Ex: Customer clubs43 www.Office2go.dk
  44. 44. Market introduction stage: Product life cycle - PLC •cost high sales volume low •losses •high prices – skimming or penetration •Innovators Growth stage: •costs reduced due to economies of scale - sales volume increases significantly •profitability •prices to maximize market share •Early adaptors and majority Mature stage: •costs are very low sales volume peaks •prices tend to drop due to the proliferation of competing products - very profitable •Late majority – innovators are gone Pre- The early The The long- The final Decline stage: relationship stage Development term stage •sales decline stage stage stage •prices drop (lower prices may lead to lower value perception) •profits decline44 www.Office2go.dk
  45. 45. The final stage • Total commitment from seller and buyer. • No doubt about the advantage of dealing with each other • Invite to football matches, golf, vacations ect. But problems are coming! • New developments are outmatching our product • Customers begin to disloyal • If we don’t react it could have a long term effect. •Cipramil (Lundbeck)45 www.Office2go.dk
  46. 46. PLC – Product Life Cycle Mange forskellige forløb – Kan være produktgrupper46 www.Office2go.dk
  47. 47. The Boston MatrixMarket GrowthHigh Question mark Stars ? Dogs Cash Cows Market Share Low High47 www.Office2go.dk
  48. 48. PLC + BCG48 www.Office2go.dk
  49. 49. Coffee break49 www.Office2go.dk
  50. 50. Customers – who are they……….. And what can we learn from them…………………………50 www.Office2go.dk
  51. 51. How do the customer act51 www.Office2go.dk
  52. 52. Buying process Problem identification Information search Evaluation of Routine or habitual alternatives. purchase Purchase Post purchase eval.52 www.Office2go.dk
  53. 53. Decision making process Extent of involvement High Low Extended Complex decision making Limited decision making, Extent of analysis (Info search, (Cars, homes, vacations) incl. Varity seeking making consideration of and impulse purchase alternatives) Habit/routine Brand loyalty Inertia (Little or no info search) (Athletic shoes, milk, (frozen vegetables, Paper deodorant) towels)53 www.Office2go.dk
  54. 54. The evaluation process Where can marketers influence the buying process Problem identification Information search Routine or habitual Evaluation of alternat. purchase Purchase Post purchase eval.54 www.Office2go.dk
  55. 55. Why are these areas of special interest to marketers • Hard facts Problem identification – Product Market research – Price Information search – Quality Routine or habitual – Size Evaluation of alternat. purchase – Technique Purchase • Soft facts Post purchase eval. – Attitudes – Lifestyle – Brand attitudes – Social acceptability – Salespersons involvement – Storytelling – Customer orientation55 www.Office2go.dk
  56. 56. Customer Journeys • Storytelling • Watching customers ”Customer Journeys” Eksempel: Ent re: 2 min – 55 kr Forl. 1: 10 min – 0 kr Forl. 2: 20 min – 25 kr Rest 1: 20 min – 25 kr Rest 2: 0 min – 0 kr Andet : 20 min – 25 kr Kult 1: 10 min - 25 kr 82 min – 155 kr Ent re: 2 min - 55 kr Forl 1: 20 min - 25 kr Forl 2: 15 min - 25 kr Rest 1: 0 min - 0 kr Rest 2: 15 min - 50 kr Andet : 10 min - 25 kr Kult 1: 10 min - 25 kr 72 min - 205 kr Stimuler merforbrug delund sørensen holm rigtige steder!56 www.Office2go.dk
  57. 57. Listening – not evaluating • Storytelling • Watching customers • Meeting the customer • Customer days • Listening not evaluating: Story from a leading computer company – IBM? 1. The lady that could not get the computer ”foot-pedal” to work and had to be told that the computer was not a sewing machine and to take the mouse of the floor. 2. People who phone and complained that their software says ”press any key”, but the keyboard has no key marked ”any key”, so there must something wrong with the keyboard. The answer from the service people: ”read the ”flaming” manual........ No wounder that DELL and Apple has succes.........57 www.Office2go.dk
  58. 58. Complainers • Because we do not receive any customer Storytelling complaint it dos not mean that all is well - do Watching customers not confuse silent complainers with satisfied customers. Meeting the customer • Most dissatisfied customers do not complain Customer days to us – probably only 4-5 % bother Listening not evaluating: • Dissatisfied customers tell everyone but us What about complainers • Dissatisfied customers buy less • Typically the cost of complaint resolution is 10-25 % of the cost of finding a new customer. • Resolved complaint tends to become more loyal customers.58 www.Office2go.dk
  59. 59. Today’s subject Marketing Audit: 1. Macro environment forces – Political/legal, economic/demographic social/cultural, technological - PEST 2. Micro environment actors – Customers, competitors, substitutes, suppliers, distributors and suppliers – Porters five forces 3. Against whom are we competing and what market are we in – Porters value chain and value curves 4. Consumer analysis59 www.Office2go.dk
  60. 60. Nothing more for today Jacob Holm Tlf: 24 42 11 32 Email:jacob.k.holm@gmail.dk www.office2go.dk60

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