DR. DAWNE MARTIN MKTG 241 JANUARY 31, 2012 Environmental Analysis.

DR. DAWNE MARTINMKTG 241

JANUARY 31 , 2012

Environmental Analysis

Agenda

Review revised scheduleReview environmental analysisIdentify Customer Analysis componentsDetermine customer segments

Identifying methods of segmenting consumer and b2b markets What makes a good market segment? Discover how Rethink Tool #3 applies to customers

For Next TimeQuiz: Chapter 1 - 3Environmental Analysis – due Thursday, Feb. 9Extra Credit Opportunities

CBA Professional Development Day – Friday, Feb. 10 CBA Distinguished Lecture, Monday, Feb. 13, 10:30-11:20 in Forum Hall

John Bilbrey, President & CEO of Hershey’s – K-State Class of 1978

Industry and Environmental AnalysisDue: Thursday, Feb. 9, 2012

Purpose: Identify the external environmental trends, threats and opportunities affecting the industry in which your business resides. Key questions include: 1) What are the significant trends and future events in the industry? 2) What threats and opportunities do you see? 3) What are the strategic questions – areas of uncertainty as to trends or events that have potential to impact strategy? Evaluate these questions in terms of their impact.

Economic: What are the economic prospects for the industry, including the effects of economic growth (GDP), interest rates, trends in related industries, inflation? How will these affect your business and strategy?

Environmental Analysis

Social/Cultural and demographic: What are the relevant current trends in lifestyles, fashions, technology use and other components of culture that will affect your business. What are the demographic trends that will affect

Technological: What technological changes will impact your customers, suppliers and your own operation? To what extent are the existing technologies maturing? What technological

Governmental/Political/Legal: What trends or changes in the government, political and legal climate will affect your business.

Missing information important to your opportunity: What information was not available or has not been forecasted that might affect your business?

Characteristics of a Good Opportunity

Opportunity: A good chance (Webster’s Dictionary

Good Opportunity Create significant value for customers by solving a

significant problem or filling a significant unmet need for which the customer is willing to pay a premium price

Offers significant profit potential Represents a good fit with the capabilities of the

entrepreneur – experience and skills Offers sustainability over time – not a fad Can obtain financing

Evaluating Opportunities

Market sizeMarket growth rateSignificant customer valueWell-defined targetCustomer felt needAccess to customersCommand premium priceBuild and sustain the

brandSustainable competitive

advantageCompetitorsBarriers to entry

Cost to enter the marketCost to scale upTime to first dollarRed ocean (existing

market) or blue ocean (new market space)

Profit potentialWhat does the customer

think (voice of the customer)

Personal fitFinancing available?

Customer Analysis: Preliminary Identification of Market

Market definition Who will be your likely potential customers How many are there? Trends in customer demographics? Geographic dispersion

Segmentation: Who are likely to be your biggest customers? The most profitable customers? The most attractive potential customers? Are there any logical groups based on needs,

motivations or characteristics?

Customer Analysis

Segmentation Approach: How should be the market be segmented into groups, with relatively homogeneous needs, that would require a unique marketing strategy? Benefits sought Usage level Application Organizational type or size Geographic location Customer loyalty Price Sensitivity

Customer Analysis

What is the customer’s motivation for buying your product or service? What elements of the product or service are valued

most? What are the customer’s objectives? What are they

really buying? How do segments differ in their motivation priorities? Do these needs represent leverage points for

competitors?What are the customers unmet needs?

Why are some customers dissatisfied? What are the severity and incidence of customer

problems? What are the unmet needs that customers can identify

and those of which they are unaware? Do the unmet needs represent a leverage point for

competitors?Summary and implications for your business

Market Segmentation – What is it

Market Segments: Groups of customers that are similar in the way they view products

What Makes a Good Market Segment? Customers within the segments must have similar

needs Segments must be different from each other Segments must be measurable Segments much be large enough to be profitable There must be a way to reach segments

Why Do Marketers Segment Markets?

Fundamental Forces That Shape Differences in Consumer Needs Fundamental Forces That Shape Differences in Consumer Needs

Fig. 5.2 © 1997 Prentice-Hall, Inc.

Consumer MarketCustomer Needs

LifestyleForces

UsageBehaviors

DemographicForces

AgeIncomeMarital StatusHouseholdEducationOccupation

AttitudesValuesActivitiesInterestsOpinionsPolitical Orientation

QuantityTime of UsePersonalSocialGiftFrequency of Use

13

Fundamental Forces That Drive Differences in Business-to-Business Customer Needs

Fundamental Forces That Drive Differences in Business-to-Business Customer Needs


Business-to-BusinessCustomer Needs

CompanyCulture

UsageBehaviors

FirmagraphicForces

Number of EmployeesSales VolumeNumber of LocationsYears in BusinessIndustry (SIC)Financial Situation

Business SophisticationGrowth OrientationInnovativenessTechnologyCentralized DecisionMaking

ApplicationQuantityTime of PurchaseFrequency of PurchaseExperienceUsers

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Segmentation HierarchySegmentation Hierarchy


MassMarket

Approach

Mar

ket

Dem

and

Multi-segmentStrategy

SingleSegmentStrategy

SegmentNiche

Strategy

MassCustomi-

zation

Segment A

Segment B

Segment C Segment C

Segment B

Niche A1

Custom B1

Custom B2

Custom C1

Custom A3

Custom A2

Custom A1

Target Market

Segment A

16

Exercise

Make an Initial Identification of Your Potential Markets

What variables would you use to segment the market? Why?

Where might you find information about your market and potential customers?

© 2009 Prentice Hall

Rethinking Marketing, 1st Edition

3-15

Use intuition, imagination, inspiration. and ideation to think the unthinkable.

Implications Smart customers do dumb things Products we create to meet customer needs often

change the way we live Customer use products in the ways we never intended So how do we harness creative customers?

Rethink Tool #3



3-16

Customers are Smart: Faced with a dilemma that can be solved by consumption, customers will engage in Problem definition Search for information Information processing Decision making Action Finally feedback loop

Customers still do seemingly dumb things They are emotional rather

than rational Buy products no one ever

thought they would Don’t buy some of best

offerings ever invented Pay prices no one ever

expected Are intensely loyal to stores Hate advertising yet post

and watch on You Tube

Implications



3-17

Products and services developed in response to customer needs• Offerings often assume very different flight paths

than intended • Cup holder—humble simple device that has

changed consumption behavior of entire nation. 1 out of every 5 meals in the United States is eaten in a car

Customers interact with products in unintended ways• To great benefit, merely playful, or downright

dangerous• SMS—originally designed to send messages from

company to subscribers, now a popular way to flirt, in 2001 more than 1 billion seasonal greetings sent in place of traditional Christmas cards

Customer behavior: 2 perspectives



3-18

The Paths that Products Take: What Products Do to Customers

Offerings evolve Intentional

Extension by creator—“new and improved” Subversion by consumer Diversion—mobile phones with cameras

banned from public spaces where unsuspecting persons could be filmed in compromising states

Unintentional Emersion—SMS to notify parents of truant

students Aspersion—4x4 vehicles cause damage to off-

road environments



3-19

An Offering Evolves by Either

Intentional process(people change offering) Extension – Changes planned by company Subversion– Intentional change of offerings by

social actors (Nike as a status symbol) Diversion – 3rd party changes the use of the

product/offering (Napster – Google Books)

Unintentional process(offering changes people) Emersion – offering changes the way people

behave – email, mobile phones, text, twitter Aspersion– unanticipated side effects of products

– childhood obesity and computer gaming



3-20

Lead users User of novel or

enhanced products

Faces needs that will be general in marketplace in future

Positioned to benefit significantly from obtaining a solution

Creative customers Work with all

offerings Don’t necessarily

face needs of general public

Need not benefit directly

Rarely ask permission to experiment with firms offering

Clever Customers vs. Lead Users



3-21

They exist and are here to stayThe potential for consumers to

reprogram, adapt, modify, and transform offerings is growing

Creative consumers are a rich source of innovationChallenge for firms

Recognizing that creative consumers exist Identifying their actions Understanding how to capture and create

value from them

Treat Creative Consumers Strategically



Treat Creative Customers Strategically

Consumer Creativity ≠ Creative Consumers Consumer creativity

Study of consumer problem solving Creative consumers

Reality of how consumers adapt, modify, or transform proprietary offering

Firms Stances Toward Creative Consumers Discourage

ResistEncourage

• Enable



3-23Capturing and Creating Value from Creative Consumers

Awareness—many firms are blissfully unaware, but since advent of Internet, ignorance is less common

Analysis—what are implications for the firm, should attitude be positive or negative, hands-off or engage

Response—should be unambiguous, send appropriate message to all stakeholders

DR. DAWNE MARTIN MKTG 241 JANUARY 31, 2012 Environmental Analysis.

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