Market Analysis

Marketing Management

Evolving Views of Marketing’s Role

Evolving Views of Marketing’s Role

The customer as the controllingfunction and marketing as the

integrative function

Customer

Marketing

Production

Human

resources Finance

Why Analyze Markets?

Search for key trends, forecast futureIdentify opportunitiesUnderstand/anticipate customer needs and wants; benefits that customers wantSegment the market into similar sub-groupsAnticipate competitors’ strategies

Defining the MarketDefining the Market

fast food

super markets

home cooking

restaurants

convenience stores

Market TrendsMarket Trends

economicdemographicpoliticalsocialtechnological

Model of Buying BehaviorModel of Buying BehaviorBuyer’s decisionprocessProblem recognitionInformation searchEvaluationDecisionPostpurchase

behavior

OtherstimuliEconomicTechnologicalPoliticalCultural

Buyer’scharacteristicsCulturalSocialPersonalPsychological

Buyer’s decisions

Product choiceBrand choiceDealer choicePurchase timingPurchase amount

Marketingstimuli

ProductPricePlacePromotion

Four Types of Buying BehaviorFour Types of Buying Behavior

ComplexBuying

Behavior

Dissonance-Reducing Buying

Behavior

Variety-SeekingBehavior

HabitualBuying

Behavior

HighInvolvement

LowInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

Participants in the Business Buying Process

Participants in the Business Buying Process

Gatekeepers

Initiators

Buyers

Influencers

Deciders

Users

Approvers

Market AttractivenessMarket Attractiveness

sizegrowthcompetitive intensityprofitabilitybarriers to entry

Analyzing CompetitionAnalyzing Competition

define the marketidentify and describe key competitorsevaluate key competitorsanticipate competitive actionsidentify potential competitors

Hypothetical Market Structure & Strategies

Hypothetical Market Structure & Strategies

40%

Marketleader

30%

Marketchallenger

20%

Marketfollower

10%

Marketnicher

Expand MarketDefend Market ShareExpand Market Share

Attack leaderStatus quo

Special-ize

Imitate

ConclusionsConclusions

Market analysis provides an important foundation for market-driven strategy decisions.Constant change makes ongoing analysis critical.Focus on customers.Look for ways to predict future market structure, behavior, and competition.

Market Segmentation, Targeting, and Positioning

Marketing Management

Toothpaste ExampleToothpaste Example

prevent cavitieswhiten teethfreshen breathreduce tartarfight plaquetaste good

Segmentation TermsSegmentation Terms

market segmentsubgroup of people or organizations with similar product or service needs

market segmentationprocess of dividing a market into meaningful segments

Multi-Segment vs. Undifferentiated Strategy

Multi-Segment vs. Undifferentiated Strategy

multi-segment

concentrated

undifferentiated

Identifying SegmentsIdentifying Segments

featuresbenefit soughtgeographicsdemographicspsychographicsusage

rateoccasion

Describing Segments -Toothpaste

Describing Segments -Toothpaste

BenefitSought

Demo-graphics

Usage rate/occasion

Psycho-graphics

Brands

whiten,freshenbreath

teens,youngadults

smokers,“big date”

sociable,active

RembrandtListerine

preventcavities

families heavy conserva-tive

Pepsodent

taste children light hedonistic Aquafreshfor kids

sensitivity seniors medium worriers Sensodyne

Describing Segments - Dog FoodDescribing Segments - Dog FoodBenefitSought

Demo-graphics

PreferredType

Psycho-graphics

Size

ease ofuse

families,children

meal outdoor,hearty, littleattachment

40%

nutrition high income high pricedcanned

attached todog

13%

pamperdog

urban nokids

canned,soft-moist

finicky 10%

Analyzing Segment Attractiveness

Analyzing Segment Attractiveness

sizegrowthmeasurabilityresponsivenessaccessibilityprofitabilitycompetitiveness

Target MarketingTarget Marketing

Define and describe segmentsAnalyze and select target segment(s)Develop and implement a positioning strategy for each segment

PositioningPositioning

A marketing program customized for a selected market segment, appealing to the benefits sought by that segment.A unique implementation approach that establishes a clear competitive position in the minds of potential customers.

PositioningPositioning

TARGET SEGMENT

Needs?

POSITION

COMPANY Skills and Resources

COMPETITION Competitive Advantage?

MARKETING PLAN• product • distribution

• price • communications

Positioning StatementPositioning Statement

__________ (name of product or brand) is the brand of ___________ (product category) that offers ___________ (unique benefit appealing directly to the target) to _________________ (target segment).Crest is the brand of toothpaste that offers cavity prevention to parents with children in the home.

Perceptual MappingPerceptual Mapping

Select two most important product or service attributes (dimensions)Determine positions in two-dimensional space or “map” through researchUsed to diagnose current strategic position and to plan and track changes over time

Positioning at General MotorsPositioning at General Motors

Marketing Relationships

Marketing Management

Marketing ChannelsMarketing Channels

Manufacturers/producers

Agents/brokers

Wholesalers/distributors

Retailers Retailers

Consumers and organizational end users

Channel FunctionsChannel FunctionsChannel Functions

OrderingOrdering

PaymentsPayments

CommunicationCommunicationTransferTransfer

NegotiationNegotiation

FinancingFinancingRisk TakingRisk Taking

PhysicalDistribution

PhysicalDistribution

InformationInformation

Distribution AlternativesDistribution Alternatives

direct distributionuse of intermediaries (indirect distribution)both direct and indirect distribution

Distribution Intensity ExamplesDistribution Intensity ExamplesTrading Area

A B C

+ + ++ + + + ++ + + + +

+ + + + + ++ + + + + ++ + + + + +

+ + + ++ +

+

++

+

+

Exclusivedistribution

Selectivedistribution

Intensivedistribution

Cadillac automobiles Ethan Allen furniture Revlon cosmetics Caterpillar equipment Estée Lauder cosmetics Timex watches

Nature of Channel RelationshipsNature of Channel Relationshipstransactional

exchange collaborative

competitorfirm

suppliers

distributor

customer

Current Issues Discussion –Marketing Channels

Current Issues Discussion –Marketing Channels

increasing number of “e-tailers”direct distribution channelon the surface, would appear to be profitablemany failures recentlyhow can e-tailing become profitable?

Branding

Marketing Management

The Brand’s Role in MarketingThe Brand’s Role in Marketing

identifies key benefit sought by the selected target segmentcompetitive advantageexpression of valuethe brand integrates all marketing efforts across functional departmentssuperior brand positioning, re-positioning

Life Cycle Brand StrategiesLife Cycle Brand Strategies

Introduction: brand developmentGrowth: brand reinforcementMaturity: brand repositioningDecline: brand modification

How Important is Brand Name?

Name = nodes in memoryQuality perceptionsAwareness, familiarityImage (fun, boring, exciting, etc.)Reduces perceived risk, esp. for publicly consumed products and services

Brand Equity

the value of a brand name and symbolpremium consumers are willing to paymulti-dimensional (awareness, perceived quality, loyalty, and brand associations)increased through strategic, focused, image-building advertisingdamaged by excessive sales promotions and price-cutting

Brand IdentityBrand Identity

the meaning of a brand name and symbolMcDonald’s

clean, efficient, consistentgood valueBig Mackids

brand stretching

History of Brands -- Early Examples

History of Brands -- Early Examples

inventor-entrepreneurs:King C. GilletteH. J. HeinzAsa G. Candlergrowing corporations:National Biscuit Co.Colgate - product simplification

Current Status of Brand Management

Current Status of Brand Management

category managers to lessen anti-productive competitionimportance of implementation of the brand manager systeminfluence without authorityGM’s recent adoption of brand managersbrand - sales managers

Traits of Strong BrandsTraits of Strong Brands

deliver desired benefitsstays relevantpricing offers valueproper positioning strategyconsistent over time

Traits of Strong Brands (cont’d)Traits of Strong Brands (cont’d)

part of a strategic brand hierarchyintegrated marketing to build equitymanagers understand customer perceptionslong run marketing supportsources of brand equity monitored

Today’s Brand TrendsToday’s Brand Trends

manufacturer brands under attack from store brandsincreasing and decreasing brand loyaltyadvertising clutter makes building brands difficultimportance of service brandsdifficulty in finding new, unique brands (e.g., Accenture, Cingular, etc.)

Pricing

Marketing Management

Price Knowledge/PerceptionsPrice Knowledge/Perceptions

planned weekend trip to Parisairfare from DFW to CDG?leave Friday night, October 19th, return Mondaywhat price would you expect to pay?

Airfares (continued)Airfares (continued)first class: $10,536.98business class: $8,566.98 coach no restrictions: $2,864.98coach non-refundable, via Houston $475.98if use 40,000 AAdvantage miles$0

Price and Positioning Strategy

Marketing programProduct/Brand

decisions

target market,objectives,

& positioning strategy

Distribution

Pricing decisions

MarketingCommunications

Pricing Objectives

profit-orientedprofit maximization, ROIhigh pricing, price skimming

sales-orientedmaximize market share or saleslow pricing, penetration pricing

status quo pricingmatch competition

Price and Demand

D

D

Pric

e ($

)

Quantity

ElasticDemand

InelasticDemand

D

D

D

D

Pric

e ($

)

Pric

e ($

)

Quantity Quantity

Three Ways To SetPrices

Cost CompetitionDemand

match competitors’ prices

break-even, financial goals

what the market will bear

Break-even Analysis

Quantity (units)

Pric

e ($

)

Fixed Costs

Total Revenue

Total Costs

Profits

Losses

Break Even

Price Perceptions

internal reference price:expected priceprice last paidrange of acceptable prices

affected bypast purchasesadvertisingword of mouth

Price Perceptions

latitude of price acceptance

0 $100 $900

$450

IRP

Mid-term ExamMid-term Exam

4 hours maximum, pick up case in DRH 372, starting at 6 p.m.bring laptop computers, use DRH 232 if you prefer, individual work, open bookTCU computer labsdue at 10 p.m. via e-mail attachment (G.Low@tcu.edu), disk, or hard copy (DRH 372)do not be late

Mid-term ExamMid-term Exam

identify key marketing decision as purpose of reportcritically analyze the current or proposed strategy, competition, customers, industry, environment – do not summarize casefocus on your conclusions, insights, and implications based on the case information

Mid-term ExamMid-term Exam

develop two or three feasible marketing strategies (target segment, benefit sought, positioning strategy)analyze these strategies and select onedevelop and recommend a marketing program to implement the strategy

product/brand & marketing communicationspricing & distribution

Mid-term ExamMid-term Exam

good marketing strategies are:based on solid analysis and rationale drawing on your insights, conclusions and use of tools learnedfocused on a defined target market and the key benefit sought by that targetsupported and reinforced by consistent, creative, and logical marketing program toolspersuasive, convincing, likely to succeed

Developing and Managing the Market Offering

Marketing Management

The New Product DilemmaThe New Product Dilemma

on average in the U.S., one third of sales from new products (less than 5 years in the market)40% of new products fail

Keys to New Product SuccessKeys to New Product Success

satisfaction of customer needs and wantstop management leadershipinnovation culturestrong positioning strategycross-functional teams

Sources of New Product IdeasSources of New Product Ideas

customer satisfaction gapsresearch & developmentcorporate and marketing strategiescompetitive analysis

New Product Planning ProcessNew Product Planning Process

idea generationscreening, evaluating, and business analysisdevelopment and testingdeveloping marketing strategytest marketingcommercialization

Factors Which Lead to More Meaningful New Products

risk-seeking encouragedfrequent rotation of product assignmentsproduct management structuresmall new product teamsmore evidence required in marketing plans

Example for DiscussionExample for Discussion

Pepsi Oneover $100 million invested in marketing in launch year0.8% share of $57.9 billion CSD market80 million casesgoal of 1.7% share

Pepsi One (continued)Pepsi One (continued)

target: 18-30 yr. old Coke “transitioners”“edgy” imagefirst positioning “Only one has it all.”second positioning “True cola taste. One calorie.”newest positioning “This One’s just right.”

Personal Video RecordersPersonal Video Recorders

brands TiVo, ReplayTVcutting-edge digital video technologyfewer than 200,000 soldTiVo’s stock down from $49 to $3high price $350 - $700, $10/monthweak positioning strategies