Iipm - Marketing Strategy - Lecture 4 - Strategic Analysis - Market, Environmental & Internal

8/4/2019 Iipm - Marketing Strategy - Lecture 4 - Strategic Analysis - Market, Environmental & Internal

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MARKETING STRATEGY

Lecture 4

STRATEGIC ANALYSIS:

MARKET, ENVIRONMENTAL & INTERNAL

IIPM Bangalore

Faculty: Srikanth Gururaj


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External Analysis

Customer motivations, segments

Competitor strategy, costs, strengths

Market size, growth, profitability, distribution

Environment technology, govt., cultural, demographic

Strategic Analysis

Internal Analysis

Performance profitability, sales, cust. sat., talent

Track Record past strategies, financial resources,competencies

SWOT

Strengths Weaknesses

Opportunities Threats

Whats the Best Strategy?


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External Analysis

Customer motivations, segments

Competitor strategy, costs, strengths

Market size, growth, profitability, distribution

Environment technology, govt., cultural, demographic

Strategic Uncertainties Strategic Decisions

Internal Analysis

Performance profitability, sales, cust. sat., talent

Track Record past strategies, financial resources,

competencies

Strategic Uncertainties

Strengths

Weaknesses

Opportunities

Threats

Whats the Best Strategy? OR

Strategic Decisions


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AIRTELWill HD be accepted / penetrate? - at what affordability levels- how fast- HD content v. TV sets (chicken/egg)

Will African growth inbasic cell faster than Indian HD?

Will vertical integration

increase customer loyalty?

MAHINDRAWill SUVs hold their place inconsumer preferences?Losing lifetime value?

Strategic Uncertainties Decisions

Do we invest in HD? - now (leader?)- later (follower?)

Where do we focus?

Sell handsets ?(Multiple locals: Micromax,Karbonn, Lemon, Bling )

Invest in sedans? LoganThey did scooters

Strategic Decisions

Strategic Uncertainties

AN A

LY S I

S


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Customer Analysis

Customer Analysis can be examined in 3 key areas :

1) Segmentation (slides 6- 15 review of Brand Mgmt.)

2) Customer Motivations (slides 17, 18) (part of segmentation)

3) Exploration of Unmet Needs (slide 20) (also part of segmentation)

All 3 are inter-related, with

segmentation being all encompassing & seminal


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Competitor Analysis

New / Potential Competitors

Market Expansion: Geographies

Product Expansion: Prince balls Rackets shoes ? Backward/Forward: supplier / customer enter

Integration CCD (Coffee) /

Acquire SCA Mahindra buys Reva


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Competitor Analysis

Understanding Competitors

Build a Scorecard or Progress/Monitoring Report

Size,Growth

Profitability

BrandEquity &

Positioning

Current &Past

Strategies

CostStructures ExitBarriers


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Market Analysis

Why do we do it?

1) Make strategic judgments about:

a market / sub-market current, potential participants market attractiveness

2) Understand market dynamics : key success factors, trends, threats, opportunities


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Market Analysis

Typical Dimensions of Market Analysis

1. Size & Growth 2. Profitability 3. Cost Structure 4. Distribution 5. Market Trends


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Market Analysis

1) Size & Growth:

Questions / Considerations rate, submarkets (actual vs. potential) too small for the big players? declining markets experience curve pricing

indicators : leading indicators, turning points, analogous industries? Price pressures (overcapacity, commoditization) Category Stagnation (non-differentiation, nothing new, exciting) Buyer maturity, sophistication (value more than just brand), no price premiums Substitutes ( smart phones & cell phones, even PCs) Saturation/Penetration

declining markets experience curve pricing


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Market Analysis

2) Profitability

SupplierPower

COMPETITION existing firms

PotentialEntrants

Potential

Substitutes

CustomerPower

Porters Five -Factor Model of Market

Profitability (Industry Structure & Competitive Strategy)


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Market Analysis

2) Profitability : (Right question? Any higher-level question?)

Porters Five Factors

1. Competition: Current/Existing . Future/potential? How many, resources, staying power Points of differentiation, uniqueness? Level of fixed costs (overcapacity & pricing pressures?). Exit barriers? Contracts, relationships New entrants? Barriers, scale, distribution?

2. Substitutes : Ciscco telepresence

3. Customer : retailWal -Mart / travelresorts / integrate back, forward

4. Supplier : concentrated and supplying diverse markets? Intel?


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Market Analysis

3) Cost Structure :

Relative strategic degrees of freedom; competitive response? Look at Value Chain to see where the fat or opportunities/threats lie?

Air tickets online // containers in 1950s world trade // ready - made garments?

4) Distribution Systems :

Degree of directnesshow many steps? New channels, innovation in channels? Outlet shops, online, door -to-door/direct/multi-tier / bundled / co-branded / telesales,

phone/home-shopping

5) Market Trends :

Whats changing? Whats important? Fads vs. Trends = d riven by demographics, long-term values, technology, cross-category


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Market Analysis

2) Profitability

SupplierPower

COMPETITION existing firms

PotentialEntrants

Potential

Substitutes

CustomerPower

Porters Five -Factor Model of Market

Profitability (Industry Structure & Competitive Strategy)

VARY BY INDUSTRY

& MARKET


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Market Analysis: Hot Growth Markets? - cant ignore! Many rush in. (e -commerce, dot.com of late 1990s, early 2000s & 10

yrs later in 2011-12; mobile VAS operators in India)

- Market, economy slows down- Aggressive late entrants buy market share by dropping price - Market leader/ incumbent fights back with new products, price cuts

- Superior Follower (Apple Newton Palm Pilot Blackberry Smart PhoneApple iPod, iPhone, iPad)

Knock Offs, copies

All leads to Shakeout / consolidation Academic Study of highly anticipated, touted new products/markets from

articles/forecasts in Business Week, Fortune, WSJ from 1960-1979:55% of growth forecasts fell short for various reasons :- Overvaluation of technology, poor consumer demand, cost barriers, politicalissues, poor distribution(Roll your own cigarettes, moving sidewalks, tooth-decay vaccines, home grocery delivery)


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The Competitive Life Cycle


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Environmental Analysis

One Step removed

(higher level) than market analysis

Technology Government Economics Culture Demographics

Scenario Building

Monitor,analyze;

contingencies

Short-Term Long-Term

Analyze deeply, fast,

plan & act

Forget it! Monitor,analyzeLow

High

IMMEDIACY ( how soon? )

>>>>>>>>>>>>> Strategic uncertainties!

IMPACT ( how important )

12

3


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Internal Analysis

Know Thyself!

Understanding a business organization in-depthMore information is available!

Analysis based on:1) Financial: Sales, Profits, Costs

2) Organizational structure3) Management style

Identify organizational Strengths, Weaknesses, Constraints and develop responsivestrategies!


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Internal Analysis

Satisfaction / Loyalty

Quality

Relative Costs

Innovation / NewProducts

EmployeeTalent Pool

CURRENT PERFORMANCE

L-T PROFITS


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Internal Analysis

Market Attractiveness

- Market size & growth rate- Market profitability- Pricing trends- Competitive intensity / rivalry- Entry barriers- Opportunity to differentiate- Demand variability- Segmentation- Distribution structure- Technology development

Competitive Strength

Company / Product Line / Strategic Business Unit:

- Strength of assets andcompetencies- Relative brand strength (marketing)- Market share & share growth- Customer loyalty- Relative cost position-Relative profit margins- Distribution strength- Production capacity- Technology / Innovation- Quality- Finances- Management strength

McKinsey matrix / GE

matrix portfolio analysis model


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Internal Analysis McKinsey matrix / GE matrix portfolio analysis model

COMPANY COMPETITIVE STRENGTH

High Medium LowMARKET

ATTRACTIVENESS

High

Medium

Low

Invest / Grow

Earn Selectively

Harvest / Divest


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News Items Remember Customer Analysis is already presented in class!

e-reading Google Editions

Market Analysis: distribution innovation ;Environ. Analysis: technology; fad or not?

Kids Luxury Brands Environ. Analysis: demographics, lifestyle (both parents working)

Upwardly Mobile Tea Market Analysis: demographics, work styles

Environ. Analysis: import incentive

Nestle global finance community pressure Internal Analysis financial resources

Tiffany watches Issues?

Iipm - Marketing Strategy - Lecture 4 - Strategic Analysis - Market, Environmental & Internal

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