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  • Slide 1
  • External Analysis
  • Slide 2
  • OVERVIEW n External Analyze Global Societal (Macro) Factors Analyze Global Task (Micro) Factors n Industry n Competitors
  • Slide 3
  • SOCIETAL (MACRO) ECONOMICPOLITICAL/ LEGAL TECHNOLOGICAL SOCIOCULTURAL TASK (MICRO) Competitors Industry INTERNAL
  • Slide 4
  • INDUSTRY n Definition: Group of firms producing a similar product or service Often defined by government (SIC codes), analysts (Valueline and Investment Analyses) Share Analysis & Forecast n Financial Trends & Forecast n Porters 5 Forces of Industry Competition
  • Slide 5
  • Overall Assessment of Competitiveness n Five Forces Model Potential Entrants Rivalry Among Firms Substitutes Buyers Suppliers
  • Slide 6
  • Industry Analysis n Market Share Analysis Definition of market Definition of competitors n Examples
  • Slide 7
  • Segments n Business Segments Johnson Controls has 4 n Auto; Controls; Plastic; Battery n Geographic Segments U.S.; Europe; Pacific, etc. n Customer Segments home market; business market; government market. n Market Segments fruit-beverage market alcoholic beverage market
  • Slide 8
  • Two Segment Questions n External question: What share of the total market do we have? n Internal question: How much does that market contribute to our: n Sales; Net Income; Assets
  • Slide 9
  • Industry Analysis Cont. n Financial Analysis Sales Net Income Other Indicators Ratios
  • Slide 10
  • Competitor Analysis Who Are the Existing and Potential Competitors? Who Are the Existing and Potential Competitors? What Strategic Groups Can Be Identified? What Strategic Groups Can Be Identified? What Are Their Levels of Sales, Share and Profits? What Are Their Levels of Sales, Share and Profits? What Are Their Growth Trends? What Are Their Growth Trends? What Are Their Strengths, Weaknesses, Strategies? What Are Their Strengths, Weaknesses, Strategies?
  • Slide 11
  • U.S. Restaurant Chains n Strategic Groups Price Product-Line Breadth Limited Menu Full Menu Low High McDonald Burger King Wendys Pizza Hut Chi-Chis Red Lobster Olive Garden IHOP Bob Evans Shoneys Dennys
  • Slide 12
  • Levels of Market Competition n Product Form - brands which directly compete n Product Category - products with similar characteristics n Generic Competition - products which satisfy the same customer needs n Budget Competition - products which compete for the customers budget
  • Slide 13
  • Finding Hidden Competitors n Although there may be many suppliers or brands of a product, customers may see only a small number as suitable n Use research to identify your relevant competitors by determining your customers acceptable sets of suppliers or brands plus the criteria which distinguishes suppliers or brands
  • Slide 14
  • Market Structure Analysis n Understanding Consumer Perceptions of Products and Brands in a Market n Use of Product Mapping Technology to Visually Display Relationships among Products or Brands and Attributes which Define the Space n Can be Used to Define Competitors
  • Slide 15
  • Which Competitors to Analyze? Number Depends on n Planning Horizon - the longer the time horizon, the more opportunity there is for potential competitors to enter n Market Rate of Change - the faster the rate of change the greater the opportunity for new entrants
  • Slide 16
  • Which Competitors to Analyze? Which Competitors to Analyze? n Four competitors should always be included: The market leader (largest share) The most profitable competitor The competitor most like us The fastest-growing competitor
  • Slide 17
  • Competitor Strategic Profile n Provide users with a broad understanding of competitive strategy, including management, goals, capabilities, business/market selection criteria and likely competitive behavior. n Include description, direction, assessment of strategies and implications, in terms of threats and opportunities.
  • Slide 18
  • Information Required n Cost structure of competitors n Timing of competitor market entry n How competitor will respond to a new product introduction, price change, etc. n How competitors are positioned in the market n Competitors product performance and degree of customer satisfaction/loyalty
  • Slide 19
  • Benchmarking 1. Determine which functions to benchmark 2. Identify key performance variables to measure measure 3. Identify the best-in-class companies 4. Measure performance of best-in-class companies companies
  • Slide 20
  • Benchmarking 5. Measure your own performance 6. Specify programs and actions to meet and surpass the best-in-class and surpass the best-in-class 7. Implement and monitor results
  • Slide 21
  • Market Analysis How Attractive Is the Market or How Attractive Is the Market or Industry and Its Submarkets? Industry and Its Submarkets? What Are the Forces Reducing What Are the Forces Reducing Profitability in the Market? Profitability in the Market? What Entry and Exit Barriers? What Entry and Exit Barriers? What are the Growth Projections? What are the Growth Projections? What are the Cost Structures? What are the Cost Structures? What are the Profitability Prospects? What are the Profitability Prospects?
  • Slide 22
  • Market Analysis What Are the AlternativeWhat Are the Alternative Distribution Channels Distribution Channels and Their Relative Strengths? and Their Relative Strengths? What Industry Trends AreWhat Industry Trends Are Significant to Strategy? Significant to Strategy? What Are the Current andWhat Are the Current and Future Key Success Factors? Future Key Success Factors?
  • Slide 23
  • Customer Analysis n What Are the Major Segments? n What Are Their Motivations and Unmet Needs?
  • Slide 24
  • Market Segmentation The process of dividing large heterogeneous markets into smaller homogeneous subsets of people or businesses with similar needs and/or responsiveness to marketing mix offerings. The process of dividing large heterogeneous markets into smaller homogeneous subsets of people or businesses with similar needs and/or responsiveness to marketing mix offerings.
  • Slide 25
  • Market Segmentation A managerial strategy that adapts a firms marketing mix to best fit the various consumer demand curves existing in a market.A managerial strategy that adapts a firms marketing mix to best fit the various consumer demand curves existing in a market. An adaptive strategy that seeks to obtain competitive advantage by doing a better job of satisfying customer requirements.An adaptive strategy that seeks to obtain competitive advantage by doing a better job of satisfying customer requirements.
  • Slide 26
  • Steps in the Market Segmentation Process 1. Analyze the Market Size and Structure Attitudes and Usage Competitive Position 2. Develop Segment Profiles Identify Factors Which Differentiate Segments Describe Characteristics and Behavior of Segments Behavior of Segments
  • Slide 27
  • Steps in the Market Segmentation Process 3. Select Target Segments Which Represent Best Market Opportunity Represent Best Market Opportunity 4. Design Marketing Program for Each Target Segment Each Target Segment Positioning Marketing Mix
  • Slide 28
  • Steps in the Market Segmentation Process 5. Analysis and Appraisal Do We Have the Resources? How Flexible Is Our Approach? Does Target Segment/Strategic Plan Meet Our Objectives? Does Target Segment/Strategic Plan Build on Our Strengths?
  • Slide 29
  • Bases for Consumer Market Segmentation n State of Being: Demographic, Geographic n State of Mind: Psychographic Social Class, Lifestyle Personality, Attitudes, Values n Product Usage: Users vs. Non-Users of Brand Heavy vs. Light Users Users vs. Non-Users of Category Usage by Situation n Benefits Sought
  • Slide 30
  • Segmentation Criteria n Group Identity Within Segment Homogeneity Between Segment Heterogeneity n Sufficient Size n Measurable Market Potential n Clear Variations in Behavior Relative to Other Segments n Influence Via Available Media Segment Can Be Reached Efficiently
  • Slide 31
  • SUMMARY n External Analyze Global Societal (Macro) Factors Analyze Global Task (Micro) Factors n Industry n Competitors n Why do an External Analysis? To identify opportunities and threats.