1) This document provides an overview of external and customer analysis for strategic planning purposes. It discusses analyzing the macroenvironment, industry structure, competitors, customer segments, and identifying unmet customer needs. 2) Key aspects of external analysis include identifying trends, opportunities, threats and uncertainties that may impact strategic decisions. Understanding competitors involves analyzing their strategies, resources, aggressiveness and likely responses. 3) Customer analysis involves segmenting the market, assessing customer motivations, loyalty and priorities. It also examines unmet customer needs that could be addressed. Understanding external factors, competitors and customers is essential for strategic decision making.

1. Week 3Marketing Management

2. Strategic AnalysisExternal and Customer AnalysisPPT 3-2

3. External and Customer AnalysisPPT 3-3“To be prepared is half the victory.”- Miguel Cervantes

4. The Role of External AnalysisStrategic Decisions Where to compete

5. How to competeExternalAnalysisIdentification Trends/future events

6. Threats/opportunities

7. Strategic uncertaintiesAnalysis Information-need areas

8. Scenario analysisFigure 3.1

9. External Analysis

10. Strategy funnel – industry sideEnvironmental TrendsCustomer &BenefitsIndustryStructureCompetitiveSpaceSegment Size ChannelsIndustryMarketCompetitiveDynamicsPerceptualSpaceStrategic PositioningValueProposition

11. I. Environmental Scanning: STEEP analysisMacro-environmentSocio-culturalForcesOperatingEnvironmentUnion/employeesCommunitiesFirm/OrganizationStructureCultureCompetencies ResourcesTechnologicalForcesPoliticalForcesTrade AssociationRegulatorsCompetitorsStockholdersCreditorsSuppliersEconomicForcesEcologicalForcesCustomers

12. OperatingEnvironmentUnion/employeesCommunitiesFirm/OrganizationStructureCultureCompetencies ResourcesTrade AssociationRegulatorsCompetitorsStockholdersCreditorsSuppliersCustomersStakeholders shape the operating environmentMacro-environmentSocio-culturalForcesTechnologicalForcesPoliticalForcesEconomicForcesEcologicalForces

13. Company competitive analysisHow does each firm compete? Quality, service, low price, something else?How effective is each? How well designed are they to compete as they do?How powerful?What resources do they control? Money, people, influence...How aggressive?How hard do they compete? What’s their trajectory?

14. Future GoalsVision statementManagerial behaviorCurrent StrategyPrice, quality, distribution, resourcesCritical AssumptionsKey beliefsBlind spotsCapabilitiesStrengths & weaknessesCompetitor response profileDriversAbilitiesResponse ProfileSatisfied or ambitious?Likely next moves?Vulnerabilities?Sensitive spots? (What will provoke retaliation?)

15. Market Share QualityCostEffective-nessAggres-sivenessPowerMCompetitor115%HHMHCompetitor225%veryLLHLCompetitor35%MMLHCompetitor420%LLHslipping LCompetitor515%MMHCompetitors tableOrganizes competitors using crucial dimensions of competition, plus effectiveness, power, trajectory, likely changes...

16. Strategic groupsUpscale ChainsPriceDiners/Family StyleFast FoodSelectionGroups of firms that pursue similar strategies with similar resources

17. Example: Variation on Gartner’s Magic Quadrant

18. Dynamic competitor analysisWhile useful, the competitor table and the strategic groups are essentially static.It is critical to make guesses about the future -- especially about when trends might stop and the ground might shift, and when new competitors might rise, or existing ones die.

19. Exercise: Competitor analysisMake a competitors table, including:market sharehow they stack up on crucial dimensions of valueeffectiveness (star the most competent ones)resources (underline richest ones)aggressiveness (arrows to indicate trajectories)Note any natural groupingsNote any likely changesNew entrants, mergers, exits?

20. Investment DecisionFour Sound QuestionsShould existing business area be liquidated, milked, maintain, or a target for investment?What growth directions should receive investment?Should there be market penetration, product expansion, or market expansion?Should new business areas be entered?

21. Strategic OptionsWhat are the value propositions?What are the key success factors (KSF)?What assets and competencies should be created, enhanced or maintained?What strategies and programs should be implemented in functional areas?What should be the positioning strategy, segmentation strategy, distribution strategy, brand-building strategy, etc.

22. Strategic UncertaintiesExternal and Customer AnalysisPPT 3-18

23. Strategic Uncertainties

24. Strategic Uncertaintiesvs. Strategic DecisionsStrategic UncertaintiesWill a major firm enter?Will a tofu-based dessert product be accepted?Will a technology be replaced?Will the dollar strengthen against an off-shore currency?Will computer-based operations be feasible with current technology?How sensitive is the market to price?Strategic DecisionsInvestment in a product marketInvestment in a tofu-based productInvestment in a technologyCommitment to off-shore manufacturingInvestment in a new systemA strategy of maintaining price parity

25. Customer AnalysisSegmentationWho are the biggest customers? The most profitable? The most attractive potential customers? Do the customers fall into any logical groups based on needs, motivations, or characteristics?How could the market be segmented into groups that would require a unique business strategy?Figure 3.2

26. Judging a Segmentation StrategyCan a competitive offering be developed and implemented that will be appealing to the target segment?Can the appeal of the offering and the subsequent relationship with the target segment be maintained over time despite competitive responses?Is the resulting business from the target segment worthwhile, given the investment required to develop and market an offering tailored to it?

27. How Should Segments be Defined?Customer CharacteristicsGeographicType of organizationSize of firmLifestyleSexAgeOccupationFigure 3.3

28. How Should Segments be Defined?Product-Related ApproachesUser typeUsageBenefits soughtPrice sensitivityCompetitorApplicationBrand loyaltyFigure 3.3

29. The Loyalty Matrix: PrioritiesLowLoyaltyModerateLoyalty LoyalMediumHighestHighCustomerLowtoMediumNon-customerHighZeroFigure 3.4

30. Customer AnalysisCustomer MotivationsWhat elements of the product/service do customers value most?What are the customers’ objectives? What are they really buying?How do segments differ in their motivation priorities?What changes are occurring in customer motivation? In customer priorities?Are there any “Hot Buttons” whose salience and impact on the market are significant and growing?Figure 3.2

31. Customer Motivation AnalysisIdentifyMotivationsGroup andStructure MotivationsAssess MotivationImportanceAssign StrategicRoles to MotivationsFigure 3.6

32. The Customer as Active PartnerEncourage Active DialogueMobilize Customer CommunitiesManage Customer DiversityCo-creating Personalized Experiences

33. Customer AnalysisUnmet NeedsWhy are some customers dissatisfied? Why are some changing brands or suppliers?What are the severity and incidence of consumer problems?What are the unmet needs that customers can identify? Are there some of which consumers are unaware?Do these unmet needs represent leverage points for competitors?Figure 3.2