Strategic Marketing- Lecture -Session 2

7/30/2019 Strategic Marketing- Lecture -Session 2

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Strategic MarketingTerm V

Indian Institute of Management TrichySep- Dec 2012

Prof Natesan RameshSession 2


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External & Customer Analysis

What is it? Why is it important in organizations? How does it affect the Strategy &

decision making ?


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External Analysiscontd

Strategic Decisions

-Where to compete?- How to compete

Analysis

-Information-needareas

-Scenario Analysis

Identification

-Trends /future events-Threats/Opportunities-Strategic uncertainties

External

Analysis


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Strategic Uncertainties Useful concept It helps develop a series of questions to examine in case of unforeseen events

Focuses on unknown elements that will affect the outcome of the strategicdecisions

Most of the Strategic decision making will be driven by a set of theseuncertainties

EXAMPLE

Strategic Uncertainties Strategic Decisions

1. Will a competitor lower prices Automate the factoryfor the trekking shoes

2. Will Rupee weaken against $ Hedge currency risk

Strategic Uncertainties Second-level Strategic Uncertainties

State of the IT industry

What will be future demand Innovation in the PC Industryfor PCs

Evolution of the PC user market


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External Analysis creative thinkingExternal Analysis provides the opportunity to think

creatively and explore various options

As a strategist, one has to look at (A) perspective ofthe Customer (B) competitor (C ) Market (D)the Environment (E) internal perspective from withinthe company

External analysis requires definition of boundaries

The level of Analysis is predicated on the Company andthe strategic decisions that are involved

Analysis is SCOPE DEPENDENT! Broad focus will lackanalytical depth and narrow focus more INSIGHT

Analysis needs to be conducted at SEVERAL LEVELS

LAYERED analysis ( primary level with depth) vs. Multiple Analysisconducted consecutively.


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Companies tend to undertake this as part of their ANNUAL

PLANNING & BUDGETING exercise

As we discussed in the first session- STRATEGY does not sit in aa VACUUM. It is impacted continuously, even on a day to day

basis which prompts managers to take action

The external analysis framework /tools are applicable regardless

of the circumstance

Smart operating managers usually have their eye on changing

conditions and are adept in getting a external analysis conductedas needed

REMEMBERwhen something changes in the market, it is

important to atleast go and do a quick check of the CHANGE using

External Analysis

Companies who are in a market share battle typically are

constantly reviewing the variables in terms of their marketing.It is important to note that COMPETITORS will and always want to

keep presenting customers with compelling reasons to buy!!!!!

Additionally CUSTOMER & COMPETITOR ANALYSIS will help

further understanding as to whether the Strategies are indeed

applicable or what impact on strategies will changing markets

require!!!!!!!!!!!!!!!!!

EXTERNAL ANALYSIS


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CUSTOMER ANALYSIS Segmentation

-who are the biggest customers? Who are the most profitable?

-who are potentially the most attractive customers?-Do Customers fall into any logical groups based on needs,motivations, or characteristics

-How could the market be segmented into groups that wouldrequire a unique business strategy?

Customer Motivations-What elements of the product/service do customers valuemost?

-What are the customers objectives? What are really buying?-How segments differ in their motivation priorities

-What changes are occurring in customer motivation? Incustomer priorities


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Customer Analysiscontd

Unmet needs- why are some customers dissatisfied? Why aresome changing brands /suppliers?

- What are the severity and incidence of consumer

problems- What are the unmet needs that customers canidentify? Are there some of which consumers areunaware?

- Do these unmet needs represent leverage pointsfor competitors or a new business model?


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Scope of Customer AnalysisSegmentation

Key to developing sustainable competitive advantage

Segmentation means the identification of customer groupsthat respond differently from other groups to competitive

offerings

Segmentation strategy couples the IDENTIFIED segmentswith a program to deliver an offering to those segments

Successful segmentation strategy requires- Conceptualization- Development- Evaluation of a targeted competitive offering


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Segmentation strategy

Segmentation strategy is judged on 3 dimensions

-Can a competitive offering be developed and implementedthat will be appealing to the target segment?-Can the appeal of the offering and the subsequent

relationship with the target segment be maintained over timedespite COMPETITIVE responses

-Resulting business from the target segment is it worthwhile?

A successful segmentation strategy is one that WITHIN A

REDUCED MARKET SPACE it is possible to create a DOMINANTPosition that competitors will be unwilling or unable to attacksuccessfully!!!


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DEFINITION OF SEGMENTSCustomer characteristics

Geographic Type of organization Size of the firm

Lifestyle Sex Age Occupation


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Product-related approaches tosegmentation

User type Usage

Benefits sought Price sensitivity Competitor ( user of competitors products)

Application Brand Loyalty


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Segmentationcontd

Low Loyalty Moderate Loyal

Customer Medium High Highest

Non-Customer

Low to

Medium

High Zero

LOYALTY MATRIX


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Segmentationcontd

Application useful particularly in

Industrial products- idea for products and marketingprograms are more likely to come from a

deep understanding of how theproduct is used than by understanding the

customer


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Segmentation

Two distinct segmentation strategies arepossible- First focuses on SINGLE SEGMENT ( which canbe smaller than the market as a whole)

- Second MULTIPLE SEGMENTS ( which isexpensive and has to be carefully tailored bysegment)

There can be important synergies betweensegment offerings


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Customer Motivations

After segmentation, the next step isconsider their motivations

Key questions that need to be answered:

- What lies behind their purchasedecisions?

- How does this differ by segment

Some of these motivations can help defineStrategy!


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Motivations

Customer motivations can be quite largein number

Therefore it is useful to group them andprioritize

Group &Structure

AssignStrategic role

ToMotivations

IdentifyAssess

MotivationImportance

Qualitative Research is a powerful tool to understandCustomer motivations.Focus groups, in-depth interviews, customer case studies

Or Ethnographic research are ways to do Qual.Research


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Change in customer priorities

Important to gain insights to changingcustomer priorities

Areas like high-tech customer prioritiesoften come from need for help in selecting

and installing the right equipment towanting low performance costs

Increasingly customers are proactive inworking with the companies/brands inprioritizing their needs


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Unmet needs A customer need that is not being addressed

They are strategic opportunities to increasemarket share or identify new areas of growth

Unmet needs are not always obvious and moredifficult to identify but also present opportunityfor aggressive pursuit

Key is to stretch technology or apply newtechnologies in order to expose UNMET needs


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Unmet needs Customers are a good source to access and getting to

tell you the UNMET needs

Problem Research ( a structured approach) develops alist of potential problems with product/service. These arethen prioritized by asking a group of 100-200respondents to rate each problem as its importance,frequency of occurrence, if a solution exists now!

Ethnographic Research a way of directly observingcustomers in as many contexts as possible. Helpsunderstand what is being done involving the target, butalso why it is being done.

Ethnographic helps with developing breakthrough

innovations ( P&Gs Magic Reach, Sirius portablesatellite radio player for future playback, Intels researchinto cheap PCs to run on truck batteries in 100 degreetemperatures etc).

Strategic Marketing- Lecture -Session 2

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