This document discusses conducting an analysis to identify market opportunities and threats. It recommends conducting: 1) A macro environmental analysis to identify trends in areas like technology, economy, politics, etc. 2) A market environmental analysis of factors like suppliers, customers and competitors. 3) An internal analysis to assess the company's strengths and weaknesses. Conducting a comprehensive analysis allows marketers to discover opportunities in the external environment and determine if the company is able to take advantage of them.

2. IDENTIFYING/DEVELOPING
MARKET OPPORTUNITIES

3. Learning outcomes
After reading this chapter, you will be able to:
• Conduct a macro environmental analysis
• Conduct a market environmental analysis
• Conduct an internal environmental analysis
• Assess an organisation’s strengths and
weaknesses in the light of market
opportunities and external threats.

4. Why conduct a comprehensive
analysis?
Effective strategic marketing planning begins
with conducting a comprehensive analysis of
an organisation’s situation to identify
opportunities and threats as well as
strengths and weaknesses.

5. Why conduct a comprehensive analysis?
cont.
• First conduct an external analysis by scanning
the macro environment and the market
environment to identify opportunities and
threats
• Then conduct an internal analysis to identify
the organisation’s strengths and weaknesses,
and determine whether it is able to take
advantage of any opportunities or minimise
threats.

6. The operating environment
• The external environment, which is a
combination of:
• macro and
• market environments
• The internal environment in which a
company operates.

7. Figure 3.1 The three-tiered operating
environment and outline for this chapter

8. Market opportunities and threats
• A market opportunity can be seen as a ‘gap’ in
the marketplace where a need is not being
satisfied sufficiently
• A market threat refers to those factors that can
inhibit you from achieving your marketing
objectives.

9. Definition of an opportunity
An opportunity can be defined as a confluence
of circumstances leading to the choice or
rejections of options.

10. Figure 3.1 Macro environmental analysis
Environmental analysis can lead the marketer
to discover trends in the macro environment
and should guide marketing decision-making.

11. Environmental analysis guide
• Marketers should prioritise trend categories
• Monitor information about macro trends
(scanning the macro environment –
STEEPLE).

12. STEEPLE analysis
•Social/demographic factors
•Technological factors
•Economic factors
•Environmental (physical/natural) factors
•Political factors
•Legal factors
•Ethical factors.

13. Marketing perspective
Cultures are not homogeneous but generally
have subcultures based on criteria such as
nationality, religion, population group, or
geographic area, each of which will have an
impact on marketing strategies.

14. Table 3.1 Opportunity identification
template – (for next four slides)

19. Market and industry analysis
• Market environment consists of suppliers,
intermediaries, customers, and competitors
(elements of the industry in which the
organisation operates)
• An industry consists of organisations that
produce similar products at a high level of
generality – for example, the FMCG
industry.

20. Market and industry analysis
Strategic group analysis – a strategic group
consists of organisations that employ a
similar mix of strategy elements.

21. Strategic group analysis
Michael Porter’s framework - industry is
influenced by five forces:
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of new entrants
• Threat of substitutes
• Rivalry among competitors.

22. Market analysis dimensions
•Clear market definition
•Emerging sub-markets
• Detect and understand sub-markets
• Be relevant to the emerging sub-market
•Market and sub-market profitability analysis
•Cost structure
•Distribution systems.

23. Market analysis dimensions (cont.)
•Market trends
• What is driving it?
• How accessible is it in the mainstream?
• Is it broadly based?
•Key success factors
•Strategic necessities
•Strategic strengths.

24. Internal analysis
.
Establishes and evaluates the organisation’s
internal strengths and weaknesses.
1. The marketing audit
• Conduct an in-depth study if weaknesses
are discovered after conducting an internal
analysis
• A systematic examination of an
organisation's marketing objectives,
strategies, organisation and performance
2. Financial analysis.

25. The marketing audit
Comprehensive Systematic
Independent Periodic

26. Financial analysis
Choose
appropriate
ratios
Compute the
ratios
Compare the
ratios
Check for
problems or
opportunities

27. Marketing perspective
The value of a comprehensive financial analysis
by means of ratio analysis should not be
overlooked by marketing strategists. By
comparing ratios over a period of time, certain
problem areas or opportunities can be identified.

28. Market size
Four key measures of market size:
• Market potential
• Market growth
• Sales forecast
• Market share.

29. Market potential
• Market potential is the maximum number
of customers who can enter the market
given a specific market definition
• The number of potential customers is an
important input to calculate the size of the
market demand.

30. Market potential
There are five major forces that can restrict a
market from reaching its full potential:
• Awareness
• Availability
• Ability to use
• Benefit
• Deficiency
• Affordability.

31. Market growth
Determined by:
• Market penetration – the total number of
customers who have entered that market at
a specific point in time
• Rate of entry – rate at which new customers
enter the market.

32. Reasons for no or slow adoption
• Customers do not need the new product or
service
• Customers cannot afford the new product
• The new product is not widely available
• Customers do not know how to use the new
product
• Customers are satisfied with existing alternatives
• Products are less observable
• Customers are skeptical about the new product’s
performance
• Customers are not able to try or sample products
• Customers do not want to incur switching costs
• More than one decision-maker is involved in the
purchase decision.

33. Categories of innovation
Easy
sells
Detergents
with improved
whiteners
Sure failures
DVORAK
keyboard
Long
hauls
Cellphones
Smash
hits
Wireless
HSDPA USB
modem

34. Market forecasting
Marketers need to forecast market
performance so that they can:
• Best allocate resources
• Exploit competitive advantages and market
opportunities.

35. Forecasting sales
Most techniques to forecast sales stem from
one of four information bases:
• existing market information
• information about developments within the
market
• scheduled market activities
• information regarding what consumers expect
to happen.

36. Opportunity analysis
Is the process of defining the exact nature of
the opportunities available in an
organisation’s operating environment in
terms of external, financial, and internal
considerations.
• Internal analysis
• Financial analysis
• External analysis.