Strategic Marketing- Fundamental Insights

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PRESENTATION 3 OF 24 / 1 Professor Noel Capon R.C. Kopf Professor of International Marketing Columbia Business School New York, NY, U.S.A. www.wileyindi a.com www.axcesscapo n.com © Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. Managing Markets Strategically Professor Siddharth Shekhar Singh Director Fellow Programme in Management & Associate Professor of Marketing Indian School of Business Hyderabad & Mohali, India

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Chapter on 'Managing Markets Strategically' from global textbook on Marketing Management by Wiley- 'Managing Marketing: An Applied Approach'

Transcript of Strategic Marketing- Fundamental Insights

PRESENTATION 3 OF 24 / 1

Professor Noel CaponR.C. Kopf Professor of International Marketing Columbia Business SchoolNew York, NY, U.S.A.

www.wileyindia.comwww.axcesscapon.com

© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

Managing Markets Strategically

Professor Siddharth Shekhar SinghDirector Fellow Programme in Management & Associate Professor of MarketingIndian School of BusinessHyderabad & Mohali, India

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Managing Markets Strategically

Section I: Marketing and the Firm

Section II: Fundamental Insights for Strategic MarketingChapter 3: Market InsightChapter 4: Customer InsightChapter 5: Insight about Competitors, Company, and ComplementersChapter 6: Marketing Research

Transition to Strategic Marketing

Section III: Strategic Marketing

Section IV: Implementing the Market Strategy

Section V: Special Marketing Topics

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CHAPTER 3

Market Insight

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Insight for Strategic Marketing

Market Insight

Customer Insight CompetitorCompany

ComplementerInsight

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What Is Insight?

Source: Impact Planning Group, by permission

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Market Insight© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Market insight is critical for:

Anticipating market

changes

Identifying potential

opportunities

Laying a foundation

for developing

Identifying areas to

differentiate

Opportunity sizing

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Building Blocks for Securing Market Insight© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Market Insight

Market Structure

Market and Product

Evolution

Industry Forces

Environmental Forces

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Market Structure

• Market definitionA market comprises customers – people and organizations – who require products and services to satisfy their needs … and have sufficient purchasing power – and interest to buy what firms are offering.

• Market size factors• Population size and growth• Population mix• Geographic population shifts• Income and income distribution• Age distribution

• Beware marketing myopia

• Approaches• Build up• SAM, TAM, PAM• Hierarchical decomposition

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Market Structure

Build Up: Illustration – Treating Aneurysms

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Market Structure

SAM, TAM, PAM

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Market Structure

Hierarchical Decomposition: Illustration – Entertainment Market

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Market Structure

Definitions and Distinctions

Product class: A group of products offered by competing suppliers that serve a subset of customer needs in a roughly similar manner.

Product form: Several product forms comprise each product class. Products within a product form are more similar in how they meet customer needs than products in other product forms.

Product line: A group of related products that a single firm offers.

Product item: A subset of the product line that is uniquely identified.

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Market and Product Evolution© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Market and Product Evolution

Product Class and Product Form Life Cycles

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Market and Product Evolution

Sales and Profit Margin Life Cycles

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Market and Product Evolution

Truncated Life Cycle

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Industry Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Direct

THE FIRM

Competitors

Suppliers

Indirect Competitors

Buyers

New Direct Entrants

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Industry Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Direct Competitors

Traditional direct

competitors

Acquisitions and

divestituresMergers Private

equity

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Industry Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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New Direct Entrants

Firm employees

Geographic expansion Networks

New sales and

distribution channels

Start-up entry

Strategic alliances

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Environmental Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Political

Economic

Sociocultural

Technological

Legal/Regulatory

Environmental (physical)

P

E

S

T

L

E

PESTLE

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Environmental Forces

Political

Policy Variable General Goal

Competition policy Enhance competition

Employment law Protect employees

Government spending Implement government policy

Multinational agreements Enhance trade and investment

Political stability Enhance investment

Privatization Enhance competition

Regulation of financial markets Protect investors

Taxation policy Redistribute income

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Environmental Forces

Economic

Economic Variable Impact on Economic Well-Being

Balance of payments Negative balance of payments means government must borrow – increased pressure for higher taxes

Exchange rates Value of national currents. Low exchanges rates help exports; high exchange rates are better for purchasing foreign goods.

Disposable income An individual’s income after paying taxes – available for spending and saving. Higher is better.

GDP or GDP per capita The measure of a nation’s output, or output per person. Higher is better.

Inflation Rate of price increases. Lower is better, but too lows means deflation.

Interest rates Affect customer spending – especially for durables and business investment. Lower is better, but too low may fuel deflation.

Savings rate Affects interest rates and consumer spending. Higher is better, but too high means insufficient consumption.

Unemployment Population out of work. Lower is better, but too low and labor costs increase.

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Environmental Forces

SocioculturalCultural Dimension

Elements of Cultural Dimensions

Aesthetics Beauty, good taste, color, music, brand names, architecture

Education Formal, vocation, primary, secondary, higher, literacy, human resources planning

Language Spoken, written, official, linguistic pluralism, hierarchy, international, mass media

Law Common, code, foreign, home country antitrust policy, international, regulation

Politics Nationalism, sovereignty, imperialism, power, national interests, ideologies, political risk

Religion Sacred objects, philosophical systems, beliefs and norms, prayer, taboos, holidays, rituals

Social organization Kinship, institutions, authority structures, interest groups, mobility, stratification, status systems

Technical and material

Transportation, energy systems, tools and objects, communications, urbanization, science, invention

Values and attitudes Time, achievement, work, wealth, change, scientific method, risk-taking, community involvement

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Environmental Forces

Sociocultural• Cultural and subcultural groups

• Localization and globalization

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Environmental Forces© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.

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Technological

Innovations since

World War II

dry copiers

color television

integrated circuits microwave

ovens passengerjet aircraft

synthetic and

optical fibers

ATMs virtually all

plastics

computers

antibiotic drugs

digital video

recorders (DVRs)

communicationsatellites

cellular telephonet

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Environmental Forces

Technological ForcesIllustration – Bank Transactions

Mode Cost/Transaction

Branch teller $2.50

Telephone $1.00

ATM $0.40

Quasi-personal response $0.24

Internet $0.10

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Environmental Forces

Technological

• Sustaining technologies: improve performance for current products on dimensions existing customers value

• Disruptive technologies: bring new and very different value propositions

• Firms often ignore or reject disruptive innovations

• inferior performance

• firm rewards – potential cannibalization

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Environmental Forces

Industry Forces

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Direct

THE FIRM

Competitors

Suppliers

Indirect Competitors

Buyers

New Direct Entrants

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Environmental Forces

The Augmented Industry Environment

Direct

CompetitorsThe Firm

Suppliers

Buyers

New Direct Entrants

Indirect Competito

rs

Political

Economic

Sociocultural

Technological

Environmental (physical)

Legal/Regulatory

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Market Insight

One Final Item

• The managerial process environment: concepts, framework, ideas, and tools to lead and manage organizations

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The Managerial Process Environment

experience curve benchmarking

value chain

core strategy

best-practice sharing

product portfolio

six marketingimperatives

core competence

marketing auditbrand equity

re-engineering

synergyprice waterfallbalanced

scorecardkey accountmanagement

crossing thechasm

positioning

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