Session 2

Situation Analysis Customer Analysis Marketing Research

Understanding and Analyzing Markets

Political - includes (L)egal, (E)nvironmental law/policy

Economic - includes (E)nvironmental climate and weather

Social/Cultural - includes (D)emographic, (E)thical, (E)ducational, (E)nvironmental attitudes

Technological

P

E

S

T

And many variants…

PEESTPESTELPESTLESLEPTSTEEPLEDPEST LIED

Where PEST fits in

Environmental Scan

/ \

External Analysis Internal Analysis

/ \

Macroenvironment Microenvironment

|

PEST

Political - Legal

Tax policy Employment laws Environmental regulations Consumer protection Special interest groups Government trade restriction and

support Licensing requirements Political Stability

Economic

Income levels and PPP Economic growth rates and Business

cycles Inflation rate Price levels Consumer confidence Savings rate Debt and credit availability Exchange rates

Sociocultural

Social values (Others, Environment, Health)

Trends and Fads Demographics Education Class structure and mobility Household patterns Religion

Technological

Rate of technological adoption and change

Infrastructure ICT level Cost of energy R&D activity Supply chain efficiency Automation

Where 5 Forces fits in

Environmental Scan

/ \

External Analysis Internal Analysis

/ \

Macroenvironment Microenvironment

| |

PEST Five Forces

Industry Analysis

Threat of New Entrants

Barriers to entry1. Supply-side economies of scale (Intel)2. Demand-side economies of scale (ebay)3. Customer Switching costs (SAP software)4. Capital requirements5. Incumbency advantages regardless of

size6. Unequal access to distribution channels7. Restrictive government policies

Power of Suppliers

Power increases if: Is more concentrated than the industry it

sells to (Microsoft) Supplier group does not depend heavily on

the industry for its profits Switching costs are high (Bloomberg

terminals) Suppliers offer differentiated products

(Drugs) Suppliers can threaten to forward integrate

Power of Buyers

Power increases if: Few buyers and larger purchase volumes Industry products are standardized Buyers face few switching costs Buyers can threaten to integrate

backward

Power of Buyers (2)

Price sensitivity is found when: Purchased product is a significant

percentage of procurement Buyers earn low profits Quality of buyers product isn’t

influenced by industries product Industry product has little effect on

buyer’s other costs

Threat of Substitutes

It offers an attractive price-performance trade-off

Cost of switching is low

Rivalry Among Competitors

Rivalry is greatest when: Competitors are numersous or are

roughly the same size Industry growth is slow Exit barriers are high Rivals are highly committed to business

and have leadership aspirations Firms cannot read each others signals

Rivalry Among Competitors (2)Price competition most likely if: Products or services are nearly identical

and there are few switching costs Fixed costs are high and marginal costs

low Capacity must be expanded in large

increments to be efficient Product is perishable

Industry Analysis (1)

Industry Analysis (2)

Pitfalls

Defining the industry too broadly or narrowly

Making lists instead of rigorous analysis Paying equal attention to all forces Confusing cyclical changes with

structural changes Using the analysis to declare an industry

attractive or unattractive rather than to guide strategic choices

Where SWOT fits in

Environmental Scan

/ \

External Analysis Internal Analysis

/ \

Macroenvironment Microenvironment

| |

PEST Five Forces

OT SW

SWOT

Summary for strategic purpose Clearly focused on a business objective Specific, unique, and detailed Complete ideas = multiple sentences

NOT single words Limited = two or three points in each area Organized = most important first (can be

weighted) SW = internal / OT = External

Perform a SWOT analysis on Highly Brill Leisure Center, based upon the following issues:

1. The Center is located within a two-minute walk of the main bus station, and is a fifteen-minute ride away from the local railway station.

2. There is a competition standard swimming pool; although it has no wave machines or whirlpool equipment as do competing local facilities.

3. It is located next to one of the largest shopping centers in Britain.

4. It is one of the oldest centers in the area and needs some cosmetic attention.

5. Due to an increase in disposable income over the last six years, local residents have more money to spend on leisure activities.

6. There has been a substantial decrease in the birth rate over the last ten years.

7. In general people are living longer and there are more local residents aged over fifty-five now than ever before.

8. After a heated argument with the manager of a competing leisure center, the leader of a respected local scuba club is looking for a new venue.

9. The local authority is considering privatizing all local leisure centers by the year 2000.

10. Press releases have just been issued to confirm that Highly Brill Leisure Center is the first center in the area to be awarded quality assurance standard BS EN ISO 9002.

11. A private joke between staff states that if you want a day-off from work that you should order a curry from the Center's canteen, which has never made a profit.

12. The Center has been offered the latest sporting craze.

13. Highly Brill Leisure Center has received a grant to fit special ramps and changing rooms to accommodate the local disabled.

14. It is widely acknowledged that Highly Brill has the best-trained and most respected staff of all of the centres in the locality.

Dada Sky

Background Vijay Shivalingu is the Marketing Director for Dada Sky Inc,

based in Western India. He is beginning his marketing plan which will form the basis of a new and exciting satellite based digital TV and Internet experience.

Personal experience. Vijay has many years experience in the motor industry, and in

fact began his career at Dada Motors Inc after graduating from university with a degree in engineering. He has no formal marketing qualifications, but has lots of valuable real-world experience.

Strengths. Dada has one of three new 25 -year government licenses to

supply satellite services across India. Dada will be the first to launch its new services in the

summer. Dada is a well-known brand in India for cars. It is not renowned for its technology brands.

Weaknesses. The company is 3 months behind schedule with its launch

programme.Opportunities. Huge expansion of TV and Internet access in India. The

expansion is growing by 100% per annum. The potential value of such a business could be huge.

Education will soon be delivered to remote Indian villages via the Internet and laptops. This is a government funded programme worth $1 billion US.

Threats. A large European competitor brand has also entered the

market. A large Australian competitor brand has announced a joint-

venture with a national terrestrial TV Indian brand.

Strengths. Dada has one of three new 25 -year government licenses

to supply satellite services across India. Dada will be the first to launch its new services in the

summer. Dada is a well-known brand in India for cars. It is not renowned for its technology brands.

Strengths. REV Dada will be the first to launch its new services in the

summer. Being first to market will help it to land grab early customers. Competitors will need to work hard to get them to swap brands especially if they are satisfied with Dada's offering. 75%

Dada has one of three new 25 -year government licenses to supply satellite service across India. It is the only Indian national company to win this prestigious contract and this fact will undoubtedly help the company attract important early adopters keen to support their flag carrier brand. 25%

Weaknesses. The company is 3 months behind schedule with its launch

programme.

Weaknesses. REV Dada is a well-known brand in India for cars. It is not

renowned for its technology brands. A rebranding exercise needs to be undertaken. It should emphasize the innovative nature of the brand. A large investment must be considered here. 60%

Dada is a well-known brand in India for industrial products. The company is 3 months behind schedule with its launch programme. This could mean that a competitor could launch before Dada. 40%

Opportunities. Huge expansion of TV and Internet access in India. The

expansion is growing by 100% per annum. The potential value of such a business could be huge.

Education will soon be delivered to remote Indian villages via the Internet and laptops. This is a government funded programme worth $1 billion US.

Opportunities. REV Huge expansion of TV and Internet access in India. The

expansion is growing by 100% per annum. The potential value of such a business could be huge. Services will include telephone, mobile devices, pay-per-view TV, all sorts of channels supplying services such as Bollywood movies to Test Cricket. 80%

Education will soon be delivered to remote Indian villages via the Internet and laptops. This is a government funded programme worth $1 billion US. This opportunity will see regular income from the winning provider. As the national brand, this is vital business for Dada. 20%

Threats. A large European competitor brand has also entered the

market. A large Australian competitor brand has announced a joint-

venture with a national terrestrial TV Indian brand.

Threats. REV A large Australian competitor brand has announced a joint-

venture with a national terrestrial TV Indian brand. The Indian TV brand is the most popular independent TV company in the country. This will help the consortium to seamlessly enter the market. 60%

A large European competitor brand has also entered the market. The company has years of international satellite experience and can build upon the synergy with its expanding British business. 40%

Developing the research plan Data Sources

Primary Secondary

Developing the research plan Approaches

Observational Focus group Survey Behavioral Data Experimental Technological Questionnaire

Question types – importance scale

Airline food service is _____ to me.

Extremely important

Very important

Somewhat important

Not very important

Not at all important

Question types – rating scale

Virgin Atlantic’s food service is _____.

Excellent

Very good

Good

Fair

Poor

Question types –intention to buy scale

How likely are you to purchase tickets on Virgin Atlantic if in-flight Internet access were available?

Definitely buy

Probably buy

Not sure

Probably not buy

Definitely not buy

Question types –completely unstructured

What is your opinion of Virgin Atlantic?

Question types –word association

What is the first word that comes to your mind when you hear the following?

Airline ________________________

British _____________________

Travel ________________________

Question types –sentence completion

When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

Question types –story completion

‘I flew Virgin a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings’. Now complete the story. __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Question types –picture (empty balloons)

Qualitative measures

Word associationWord association

Projective techniquesProjective techniques

VisualizationVisualization

Brand personificationBrand personification

LadderingLaddering

Technological devices

Galvanometers

Tachistoscope

Eye cameras

Audiometers

GPS

Sampling plan

Sampling unit: Who is to be surveyed? Sample size: How many people should

be surveyed? Sampling procedure: How should the

respondents be chosen?

Types of samples

Table 6.2 Probability and non-probability samples

Contact methods

Mail questionnaire

Telephoneinterview

Personalinterview

Onlineinterview

Pros and cons of online research

Advantages Inexpensive Fast Accuracy of data,

even for sensitive questions

Versatility

Disadvantages Small samples Skewed samples Technological

problems Inconsistencies

1) Scientific method

2) Research creativity

3) Multiple methods

4) Interdependence of models and data

5) Value and cost of information

6) Healthy scepticism

7) Ethical marketing

Characteristics of good marketing research

Barriers to the use of marketing research

Narrow conception of research

Uneven calibre of researchers

Poor framing of the problem

Late and occasionally erroneous findings

Personality and presentational differences