DR. DAWNE MARTINMKTG 241
JANUARY 31 , 2012
Environmental Analysis
Agenda
Review revised scheduleReview environmental analysisIdentify Customer Analysis componentsDetermine customer segments
Identifying methods of segmenting consumer and b2b markets What makes a good market segment? Discover how Rethink Tool #3 applies to customers
For Next TimeQuiz: Chapter 1 - 3Environmental Analysis – due Thursday, Feb. 9Extra Credit Opportunities
CBA Professional Development Day – Friday, Feb. 10 CBA Distinguished Lecture, Monday, Feb. 13, 10:30-11:20 in Forum Hall
John Bilbrey, President & CEO of Hershey’s – K-State Class of 1978
Industry and Environmental AnalysisDue: Thursday, Feb. 9, 2012
Purpose: Identify the external environmental trends, threats and opportunities affecting the industry in which your business resides. Key questions include: 1) What are the significant trends and future events in the industry? 2) What threats and opportunities do you see? 3) What are the strategic questions – areas of uncertainty as to trends or events that have potential to impact strategy? Evaluate these questions in terms of their impact.
Economic: What are the economic prospects for the industry, including the effects of economic growth (GDP), interest rates, trends in related industries, inflation? How will these affect your business and strategy?
Environmental Analysis
Social/Cultural and demographic: What are the relevant current trends in lifestyles, fashions, technology use and other components of culture that will affect your business. What are the demographic trends that will affect
Technological: What technological changes will impact your customers, suppliers and your own operation? To what extent are the existing technologies maturing? What technological
Governmental/Political/Legal: What trends or changes in the government, political and legal climate will affect your business.
Missing information important to your opportunity: What information was not available or has not been forecasted that might affect your business?
Characteristics of a Good Opportunity
Opportunity: A good chance (Webster’s Dictionary
Good Opportunity Create significant value for customers by solving a
significant problem or filling a significant unmet need for which the customer is willing to pay a premium price
Offers significant profit potential Represents a good fit with the capabilities of the
entrepreneur – experience and skills Offers sustainability over time – not a fad Can obtain financing
Evaluating Opportunities
Market sizeMarket growth rateSignificant customer valueWell-defined targetCustomer felt needAccess to customersCommand premium priceBuild and sustain the
brandSustainable competitive
advantageCompetitorsBarriers to entry
Cost to enter the marketCost to scale upTime to first dollarRed ocean (existing
market) or blue ocean (new market space)
Profit potentialWhat does the customer
think (voice of the customer)
Personal fitFinancing available?
Customer Analysis: Preliminary Identification of Market
Market definition Who will be your likely potential customers How many are there? Trends in customer demographics? Geographic dispersion
Segmentation: Who are likely to be your biggest customers? The most profitable customers? The most attractive potential customers? Are there any logical groups based on needs,
motivations or characteristics?
Customer Analysis
Segmentation Approach: How should be the market be segmented into groups, with relatively homogeneous needs, that would require a unique marketing strategy? Benefits sought Usage level Application Organizational type or size Geographic location Customer loyalty Price Sensitivity
Customer Analysis
What is the customer’s motivation for buying your product or service? What elements of the product or service are valued
most? What are the customer’s objectives? What are they
really buying? How do segments differ in their motivation priorities? Do these needs represent leverage points for
competitors?What are the customers unmet needs?
Why are some customers dissatisfied? What are the severity and incidence of customer
problems? What are the unmet needs that customers can identify
and those of which they are unaware? Do the unmet needs represent a leverage point for
competitors?Summary and implications for your business
Market Segmentation – What is it
Market Segments: Groups of customers that are similar in the way they view products
What Makes a Good Market Segment? Customers within the segments must have similar
needs Segments must be different from each other Segments must be measurable Segments much be large enough to be profitable There must be a way to reach segments
Why Do Marketers Segment Markets?
Fundamental Forces That Shape Differences in Consumer Needs Fundamental Forces That Shape Differences in Consumer Needs
Fig. 5.2 © 1997 Prentice-Hall, Inc.
Consumer MarketCustomer Needs
LifestyleForces
UsageBehaviors
DemographicForces
AgeIncomeMarital StatusHouseholdEducationOccupation
AttitudesValuesActivitiesInterestsOpinionsPolitical Orientation
QuantityTime of UsePersonalSocialGiftFrequency of Use
13
Fundamental Forces That Drive Differences in Business-to-Business Customer Needs
Fundamental Forces That Drive Differences in Business-to-Business Customer Needs
Fig. 5.3 © 1997 Prentice-Hall, Inc.
Business-to-BusinessCustomer Needs
CompanyCulture
UsageBehaviors
FirmagraphicForces
Number of EmployeesSales VolumeNumber of LocationsYears in BusinessIndustry (SIC)Financial Situation
Business SophisticationGrowth OrientationInnovativenessTechnologyCentralized DecisionMaking
ApplicationQuantityTime of PurchaseFrequency of PurchaseExperienceUsers
14
Segmentation HierarchySegmentation Hierarchy
Fig. 5.13 © 1997 Prentice-Hall, Inc.
MassMarket
Approach
Mar
ket
Dem
and
Multi-segmentStrategy
SingleSegmentStrategy
SegmentNiche
Strategy
MassCustomi-
zation
Segment A
Segment B
Segment C Segment C
Segment B
Niche A1
Custom B1
Custom B2
Custom C1
Custom A3
Custom A2
Custom A1
Target Market
Segment A
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Exercise
Make an Initial Identification of Your Potential Markets
What variables would you use to segment the market? Why?
Where might you find information about your market and potential customers?
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-15
Use intuition, imagination, inspiration. and ideation to think the unthinkable.
Implications Smart customers do dumb things Products we create to meet customer needs often
change the way we live Customer use products in the ways we never intended So how do we harness creative customers?
Rethink Tool #3
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-16
Customers are Smart: Faced with a dilemma that can be solved by consumption, customers will engage in Problem definition Search for information Information processing Decision making Action Finally feedback loop
Customers still do seemingly dumb things They are emotional rather
than rational Buy products no one ever
thought they would Don’t buy some of best
offerings ever invented Pay prices no one ever
expected Are intensely loyal to stores Hate advertising yet post
and watch on You Tube
Implications
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-17
Products and services developed in response to customer needs• Offerings often assume very different flight paths
than intended • Cup holder—humble simple device that has
changed consumption behavior of entire nation. 1 out of every 5 meals in the United States is eaten in a car
Customers interact with products in unintended ways• To great benefit, merely playful, or downright
dangerous• SMS—originally designed to send messages from
company to subscribers, now a popular way to flirt, in 2001 more than 1 billion seasonal greetings sent in place of traditional Christmas cards
Customer behavior: 2 perspectives
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-18
The Paths that Products Take: What Products Do to Customers
Offerings evolve Intentional
Extension by creator—“new and improved” Subversion by consumer Diversion—mobile phones with cameras
banned from public spaces where unsuspecting persons could be filmed in compromising states
Unintentional Emersion—SMS to notify parents of truant
students Aspersion—4x4 vehicles cause damage to off-
road environments
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-19
An Offering Evolves by Either
Intentional process(people change offering) Extension – Changes planned by company Subversion– Intentional change of offerings by
social actors (Nike as a status symbol) Diversion – 3rd party changes the use of the
product/offering (Napster – Google Books)
Unintentional process(offering changes people) Emersion – offering changes the way people
behave – email, mobile phones, text, twitter Aspersion– unanticipated side effects of products
– childhood obesity and computer gaming
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-20
Lead users User of novel or
enhanced products
Faces needs that will be general in marketplace in future
Positioned to benefit significantly from obtaining a solution
Creative customers Work with all
offerings Don’t necessarily
face needs of general public
Need not benefit directly
Rarely ask permission to experiment with firms offering
Clever Customers vs. Lead Users
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-21
They exist and are here to stayThe potential for consumers to
reprogram, adapt, modify, and transform offerings is growing
Creative consumers are a rich source of innovationChallenge for firms
Recognizing that creative consumers exist Identifying their actions Understanding how to capture and create
value from them
Treat Creative Consumers Strategically
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
Treat Creative Customers Strategically
Consumer Creativity ≠ Creative Consumers Consumer creativity
Study of consumer problem solving Creative consumers
Reality of how consumers adapt, modify, or transform proprietary offering
Firms Stances Toward Creative Consumers Discourage
ResistEncourage
• Enable
© 2009 Prentice Hall
Rethinking Marketing, 1st Edition
3-23Capturing and Creating Value from Creative Consumers
Awareness—many firms are blissfully unaware, but since advent of Internet, ignorance is less common
Analysis—what are implications for the firm, should attitude be positive or negative, hands-off or engage
Response—should be unambiguous, send appropriate message to all stakeholders