tam 302 customer requirement driven design & competitor analysis – pds 1 tam302 engineering...

TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 1

TAM302Engineering Design Principles

Syllabus Topic: Customer Requirement Driven Design & Competitor Analysis

Market Analysis


• Understand the Market and it’s Potential

Research Trends - General & specific market forecasts

• Set Some Realistic Marketing Objectives Unit sales, revenue, profit objectives etc.

•Develop Marketing/Product Strategy

Identify potential Target Market, Competitive Tactic, Market Position, Segment and its size, & Differentiation.

Market Analysis for Product Design Teams


Presto• Marketing driven company: Product development • Small family-owned mid-west company• Kitchen Products: very competitive market (with many large-company competitors)


Market Potential:Industry TrendsEx: Sporting and Athletic Goods

19921991199019891988198719865100

5200

5300

5400

5500

5600

5700

Sal

es R

even

ue

($m

illi

on

)

8.9%0.7%

-2.1%

-3.0%(predicted)

Data: US Industrial outlook 1991


Situation Analysisto estimate potential and to Set Objectives

850,000 people buy an average of 10 disposable razors each month.

Survey indicates that 1 in 100 would immediately move over to new cartridge type if available.

Estimated market potential = 850,000 x 10 x 0.01 = 85,000 per month

Objective: Be selling 80,000 per month by end of first year

Realistic objectives can only be derived from the results of your market analysis

Example:


Sales Forecasting:Existing Products

• Mechanical Extrapolations: extend

historical data into the future; moving averages or least squares (may miss turning points)

• Analytical Methods: regression analysis or

logarithms to predict based on trend analysis

• Jury of Executive Opinion


Sales Forecasting:New Products

Consumer Surveys & Focus Groups Substitute Method: Estimating replacement

potential (e.g. based on % of existing consumers who would switch)

Test Markets: expensive but reliable; place the product on the market on a limited basis


Marketing Objectives

The marketing objectives are the qualitative and quantitative goals based on data gathered from the market analysis. The objectives become the basis for the development of the marketing strategy.

Example: One year's marketing plan for one of Gillette's fastest growing products:• Achieve a 20% market share of the cartridge razor market

• Achieve a profit contribution of 43%

• Retain pegboard space at checkout counters


Direction: "If you don't know where you are going any road will get you there" - answers basic question: "Where do we want to go?"

Standard of Evaluation: performance yardstick

Management by objectives (MBO) proven over: • MBC (crisis): reactive rather than proactive• MBS (subjectives): 'do your own thing the best way you know how' (manage)• MBE (extrapolation): 'if it isn't broken don't fix it' - 'has done o.k. for us up to now'• MBH (hope): 'If you try hard enough and long enough things will work out o.k.'

Why Define Marketing Objectives?


Guidelines for GoodMarketing Objectives

• Clear & concise statements• Name specific results in key areas• Specify the period• Use measurable terms• Product objectives should be

consistent with organizational objectives

• Make objectives challenging• Make objectives attainable


Key Areas forMarketing Objectives

1. Revenue ObjectivesBasic measure of the level of activityState as % or total number

'Achieve an increase in sales'

'Increase sales next calender year from $850,000 to $1.5 million'



2. Profit ObjectivesTakes into account costs of meeting revenue objectives. State as total net profit or % increase:

'Our objective is to maximize profit'

'Generate a 15% increase in profits by the end of 1995



3. Customer ObjectivesServe as enabling objectives in determining sales and profits; represent direction for promotional aspects of marketing and product design. Should be stated in objectively measurable terms:

'Increase customer goodwill'

'Have at least 85% of our customers rate us as "best" in the area in our 1993 annual survey'


Assembling and allocating the resources necessary to achieve a company's marketing objectives with emphasis on competitive opportunities, costs, and time. The result of blending of the 4 p's: The product - to be offered The place - distribution of the product The promotion - communicate to pot.customers The price - charged for the product

Three types: 1. Market targetting,2. Competitive strategy, 3. Positioning strategy

Marketing StrategyStrategy needed to accomplish objectives


Model T

Model T

Model T

Model T

Model T

Model T

Model T

Model T

Granada

Mustang

Fairmont

Lincoln

Mercury

Fiesta

Volkswagen Bug

From: Marketing Planning Guide, Stevens et al, publ. by the Haworth Press

Undifferentiated(aggregation)

Multi-Segment(part of aggr. mkt.)

Focused(concentration)

Market Targeting

Decision process and activities conducted to identify a market to serve


Adapted from: Marketing Planning Guide, Stevens et al, publ. by the Haworth Press

CompetitiveStrategy (or Tactic)

Market Leader Expand; new uses/usersProtect: innovative tactics

Market Challenger Attack: aggressive promotionBackdoor: innovation optionsGuppy: go after smaller firms

Market follower Copy leader: match leader(do not challenge) Coping strategy: no confront. Market Nicher Geographic niche: quick resp.(specialize) Product niche: unique to cust.

Competitive Position Possible Strategies


Adapted from: Marketing

Planning Guide, Stevens et al,

publ. by the Haworth Press

PositioningStrategy (or Tactic)

High Luxury

Low Luxury

LowPrice

HighPrice

When few competitorsoccupy a positionit becomes attractive to position products in the same quadrant

• Mercedes• BMW

• Lexus• Legend• Infiniti


Market Segmentation

1. What are the identifying characteristics?

2. What is the size of the segment?

Attempt to develop a product that appeals to some part of the aggregate market

Two basic questions:


Psychographic (or lifestyle) Segmentation Useful in diagnosing markets, determining why consumers buy, and for aiming product design: Personality, life-style, self-concept (something lacking?), buying motives, attitudes. Examines:1. Interests (family, home, job, etc.)2. Opinions (social issues, politics, culture)3. Activities (work, hobbies, vacation, shoppingE.g. Timex's targeted the active lifestyle with Ironman and Triathlon

Ways of SegmentingMarket

Variables useful in deciding why buyers may want to buy.


Male Lifestyles

Scott, the frustrated factory worker, married early, had children, and now has financial troubles. Needs fantasy to make life more bearable, wants a sports car, doesn't think there is too much sex or violence on TV...................

Ben, the self-made business man, believes you get what you pay for, values his time, worries about excessive sex and violence on TV, and thinks the government should keep its nose out of private business


Candice, the chic suburbanite, supports women's lib., has many activities, and buys only whole-grain cereal for her children.............

Cathy, the contented mother, married early, big family, not enthusiastic about women's lib., is trusting, relaxed and buys cereals that her children demand.............

Eleanor, elegant socialite, spends little time preparing meals and on women's lib., spends lots of money, travels, and thinks face cream is better if it costs more.

Female Lifestyles


Benefit SegmentationFocuses,on benefits that are associated with the product & importance in purchase decisions: Economy, convenience, service, prestige.

Examples:Bank customers see convenience as the most important benefit (then service)

Toothpaste benefits: decay prevention, white bright teeth, good taste, fresh breath etc. Bright teeth most important to tobacco users and single persons.

Ways of Segmentingthe Market



Variables useful in guiding the product to a specific target

Geographic SegmentationRegion; urban, suburban, or rural; climate; state, county, or city. The most obvious way of identifying subparts of the aggregate market. Easy to apply but not always significant.

Snow tires, air conditioners, electric vehicles, types of bicycle etc.



Demographic Segmentn.Variables that distinguish states of existence: Age, sex, nationality, education, religion, race, occupation, income, social class, marital status, birthrate, family size, and family life cycle

under$5000

$5000$10,000

$10,000$25,000

over$25,000

2 +

1

0

# ofkids


Differential AdvantageProduct Differentiation

To obtain advantage over competition through observable differences in the product:

1. Obvious useful features (Polaroid's instant film processing)2. Obvious but no utility (Life Savers: 'the candy with the hole')3. Non-obvious, must be promoted (Estee Lauder: allure more than physical characteristics)


Differential AdvantageService Differentiation

Avis {1950s}: "We're number two - we try harder!"

Seek differences in the service offered or corporate culture that are of sufficient character and quality to give a preferred position in the consumer's acquisition of your products and/or services. Examples:

Motorola "6quality" and "Total Customer Satisfaction"

Avon:Selling personal products direct-to-home

•

•••Jelly: "With a name like Smucker, it has to be good"


• Understand the Market and it’s Potential Research Trends - General & specific market

forecasts

• Set Some Realistic Marketing Objectives Unit sales, revenue, profit objectives etc.

• Develop Marketing/Product Strategy

Identify potential Target Market, Competitive Tactic, Market Position, Segment and its size, & Differentiation.

Market Analysis Section of Project Report

tam 302 customer requirement driven design & competitor analysis – pds 1 tam302 engineering...

Documents

customer objectives

design competitor analysis

customer requirement

profit objectives

objectives attainable

market analysis example

companys marketing objectives

situation analysis