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 3 Marketing Management

2. Strategic Analysis External and Customer Analysis PPT 3-2

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

6. Threats/opportunities

8. Scenario analysisFigure 3.1

9. External Analysis

10. Strategy funnel – industry side Environmental Trends Customer &Benefits IndustryStructure CompetitiveSpace Segment Size Channels Industry Market CompetitiveDynamics PerceptualSpace Strategic Positioning ValueProposition

11. I. Environmental Scanning: STEEP analysis Macro-environment Socio-culturalForces OperatingEnvironment Union/employees Communities Firm/Organization StructureCultureCompetencies Resources TechnologicalForces PoliticalForces Trade Association Regulators Competitors Stockholders Creditors Suppliers EconomicForces EcologicalForces Customers

12. OperatingEnvironment Union/employees Communities Firm/Organization StructureCultureCompetencies Resources Trade Association Regulators Competitors Stockholders Creditors Suppliers Customers Stakeholders shape the operating environment Macro-environment Socio-culturalForces TechnologicalForces PoliticalForces EconomicForces EcologicalForces

13. Company competitive analysis How 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 behavior Current StrategyPrice, quality, distribution, resources Critical AssumptionsKey beliefsBlind spots CapabilitiesStrengths & weaknesses Competitor response profile Drivers Abilities Response ProfileSatisfied or ambitious?Likely next moves?Vulnerabilities?Sensitive spots? (What will provoke retaliation?)

15. Market Share Quality Cost Effective-ness Aggres-siveness Power M Competitor1 15% H H M H Competitor2 25% very L L H L Competitor3 5% M M L H Competitor4 20% L L H slipping L Competitor5 15% M M H Competitors table Organizes competitors using crucial dimensions of competition, plus effectiveness, power, trajectory, likely changes...

16. Strategic groups Upscale Chains Price Diners/Family Style Fast Food Selection Groups of firms that pursue similar strategies with similar resources

17. Example: Variation on Gartner’s Magic Quadrant

18. Dynamic competitor analysis While 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 analysis Make a competitors table, including: market share how they stack up on crucial dimensions of value effectiveness (star the most competent ones) resources (underline richest ones) aggressiveness (arrows to indicate trajectories) Note any natural groupings Note any likely changes New entrants, mergers, exits?

20. Investment DecisionFour Sound Questions Should 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 Options What 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 Uncertainties External and Customer Analysis PPT 3-18

23. Strategic Uncertainties

24. Strategic Uncertaintiesvs. Strategic Decisions Strategic Uncertainties Will 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 Decisions Investment in a product market Investment in a tofu-based product Investment in a technology Commitment to off-shore manufacturing Investment in a new system A strategy of maintaining price parity

25. Customer Analysis Segmentation Who 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 Strategy Can 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 Characteristics Geographic Type of organization Size of firm Lifestyle Sex Age Occupation Figure 3.3

28. How Should Segments be Defined? Product-Related Approaches User type Usage Benefits sought Price sensitivity Competitor Application Brand loyalty Figure 3.3

29. The Loyalty Matrix: Priorities Low Loyalty Moderate Loyalty Loyal Medium Highest High Customer Low to Medium Non-customer High Zero Figure 3.4

30. Customer Analysis Customer Motivations What 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 Analysis Identify Motivations Group and Structure Motivations Assess Motivation Importance Assign Strategic Roles to Motivations Figure 3.6

32. The Customer as Active Partner Encourage Active Dialogue Mobilize Customer Communities Manage Customer Diversity Co-creating Personalized Experiences

33. Customer Analysis Unmet Needs Why 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

34. Identifying Unmet Needs Conduct Market Research Use The Ideal Experience Use Creative Thinking Separate ideation from evaluation. Approach the problem from different mental and physical perspectives. Have a mechanism to take the most promising ideas and improve them until they turn into potential winners worth trying.

35. Relevant Assets and Competencies Chapter 3 - Competitor Analysis PPT 3-31 1)-What businesses have been successful over time? -What assets or competencies contributed to their success? -What businesses have had chronically low performance? -Why? -What assets or competencies do they lack?

36. Relevant Assets and Competencies Chapter 3 - Competitor Analysis PPT 3-32 -What are the key customer motivations? -What is needed to be preferred? -What is needed to be considered? -What is really important to the customer? What assets and competencies represent industry mobility (entry and exit) barriers?

37. Relevant Assets and Competencies Chapter 3 - Competitor Analysis PPT 3-33 4) -What are the significant value added components in the value chain? -Do any provide the potential to generate a competitive advantage?