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Real Estate Investment & Portfolio Management Prof C Bhattacharjee. Marketing is marketing; its everywhere - Prof. Michael S Baker. Socio-Cultural Legal Economic Political - Domestic - Local - International Technological. Regulators Competitors Suppliers

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Real estate investment portfolio management prof c bhattacharjee

Real Estate Investment & Portfolio ManagementProf C Bhattacharjee


Marketing is marketing its everywhere prof michael s baker

Marketing is marketing; its everywhere- Prof. Michael S Baker


External and internal environment factors for an mnc

Socio-Cultural

Legal

Economic

Political

- Domestic

- Local

- International

Technological

Regulators

Competitors

Suppliers

Consumers/External Customers

Internal Customers

External and Internal Environment factors for an MNC


Real estate investment portfolio management prof c bhattacharjee

Components of the General Environment

Economic

Demographic

Sociocultural

Industry Environment

Competitive

Environment

Political/Legal

Global

Technological


Real estate investment portfolio management prof c bhattacharjee

Components of the General Environment


Real estate investment portfolio management prof c bhattacharjee

Scanning:

Identifying early signals of environmental changes and trends

Monitoring:

Detecting meaning through ongoing observations of environmental changes and trends

Forecasting:

Developing projections of anticipated outcomes based on monitored changes and trends

Assessing:

Determining the timing and importance of environmental changes and trends for firms' strategies and their management

External Environmental Analysis

The external environmental analysis process should be conducted on a continuous basis. This process includes four activities:


Scanning models

Scanning models

  • Delphi Technique

  • Spire Approach – Systematic Probing and Identification of the Relevant Environment*

    1) fgfgf

    2) kk

*Klein and Newman


Environment scanning

Environment Scanning

  • Competitor Intelligence

  • Strategic Analysis

  • The SPIRE Approach (Systematic Probing and Identification of the Relevant Environment)*

    -Detailed list of environment variables

    -Set out strategic marketing components

    -Facilitate interactions of different factors for any linkages

  • Scenario Building

* Klein and Newman, How to Integrate New Environmental Forces into Strategic Planning, “Management Review”, Volume 69, July 1980, pp.40-48


Scenario building

Scenario Building

  • Stage 1: Analysis of the Decisions

  • Stage 2: Identification of Key Decision Factors

  • Stage 3: Identifying the Socio-Cultural Factors

  • Stage 4: Analysis of each of the key variables separately

  • Stage 5: Selection of Scenario Logics


Portfolio analysis bcg grid

Portfolio Analysis: BCG Grid

Relative Market Share

HIGH

LOW

HIGH

PROBLEM CHILD

Risky – a few go on to become STARS:

Invest in some, divest in others

STARS

Additional growth potential:

Invest further

Market

Growth

Rate

CASH COWS

Limited growth prospects:

Minimum investment, can be divested with profitability

CASH CRUNCH

No profits or cash flow either now or in the future:

Divest or liquidate unless turnaround is possible

LOW


Strategies bcg grid

Strategies: BCG Grid

Relative Market Share

HIGH

LOW

HIGH

PROBLEM CHILD

REVENUE ++ +

EXPENSE - - - -

NET - -

DIVEST/ INVEST

STARS

REVENUE + + + + +

EXPENSE - - -

NET + +

INVEST

Market

Growth

Rate

CASH COWS

REVENUE + + + +

EXPENSE - -

NET + + +

CASH CRUNCH

REVENUE + +

EXPENSE - - - -

NET - -

HOLD/HARVEST

DIVEST

LOW


A perceptual map of apparel retailers

A Perceptual Map of apparel retailers

“For Me”

Raymond’s Shoppe

Big Bazaar

Shoppers’ Stop

Fashion Street

Westside

Pantaloons

Apna Bazar

High Price

Low Price

Sheetal Boutique

Globus

Thanks

‘Flea markets’

“Not For Me”


Competitor typology

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

INDIRECT COMPETITION

DIRECT COMPETITION

SBI vs. ICICI Bank vs. IDBI Bank

Similar Offer

Barriers of Entry

A mall has food court (hunger need), sports courts, multiplexes (entertainments) retail stores (acquisition need) etc.

Different Offer

SUBSTITUTE COMPETITION

NEW ENTRANTS

An existing player has taken the diversification route to offer a service concept but now becomes a direct competitor

Archie’s Gallery and Titan / Tanishq can both compete for the gift market


Real estate investment portfolio management prof c bhattacharjee

Porter’s Five Forces

Model of Competition

Rivalry Among Competing Firms in Industry

Threat of New Entrants

Threat of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitute Products


Managing the external environment

Managing the External Environment

1969


The chinese have not one but two words for crises

The Chinese have not ONE but TWO words for “crises”:

“Danger’

&

“Opportunity”


1969 mrs g seizes the day

1969: Mrs G “seizes the day”

  • 1964: Nehru dies and Shastri becomes PM; Indira is Defense minister

  • 1965: Indo-Pak War-II; Shastri dies in Tashkent

  • Cong party filled with powerful oldies

  • They select a widowed woman as PM, so that they can control her: Indira Gandhi

  • Indira’s second honeymoon


1969 mrs g seizes the day1

1969: Mrs G “seizes the day”

  • Indira splits Cong: ‘Old’ and ‘New’

  • Communist Party splits into CPI & CPM

  • Indira’s strategy of acquiring a radical image

  • Nationalizes 19 banks

  • Abolishes privy purses for ‘royal’ families

  • “Garibi Hatao”

  • More socialist than the Communists


Itc vs taj

P N Haksar & Ajit Haksar

‘Only tobacco’ to ‘Also tobacco’

1969: Hotels

Paper

Packaging

ITH – travel & cargo

Sangeet Research Academy

Edible Oil – ‘Crystal’

Foods – ‘Aashirwaad’

Ajit Kerkar

Single Hotel: Hotel Taj Mahal

Multiple Hotels

India’s own MNC

ITC vs TAJ

  • Hotels, motels, palaces, “indovilles”


Those who forget history are condemned to repeat it georghe santyana

Those who forget history are condemned to repeat it- Georghe Santyana


Managing the internal environment factors for international marketing

Socio-Cultural

Legal

Economic

Political

- Domestic

- Local

- International

Technological

Regulators

Competitors

Suppliers

Consumers/External Customers

Internal Customers

Managing the Internal Environment factors for International Marketing


Forces affecting dmp

Forces affecting DMP

PSYCHOLOGICAL/ INDIVIDUAL/ INTERNAL FORCES

SOCIAL/ EXTERNAL/ GROUP FORCES

D

M

P

INFORMATION SOURCES

SITUATIONAL FACTORS


Examples of accessibility objectives

Examples of accessibility objectives :

  • To locate retail stores near high pedestrian traffic

  • To set up ATMs in major petrol bunks to cater to high vehicular traffic.

  • To set up a mall which is within twenty minutes drive from at least five major residential areas (e.g. Centre One, the mall that opened at Vashi, Navi Mumbai desires a catchment area of the whole of the seven nodes of Navi Mumbai).


Selecting a location a clear idea of

Selecting a location: A Clear idea of

  • The volume of the business

  • Market share

  • Competition

  • Customer segments

  • Sociological factors as the degree of urbanization

  • Suburbanization

  • Population density cluster

  • Customer type (Are the residents mostly from the lower class, upper-middle class or upper class and are the residential areas slums, low income zones or posh areas? etc.).


Important studies in analysing residential areas

Important studies in analysing residential areas

  • PRIZM: Potential Rating Index for Zonal Index Post Market………. in the US

  • ACORN: A Classification of Residential Neighbourhoods…..in the UK.

    In this method, data has been compiled from the UK census on the characteristics of the households like age, family size, occupation etc. to help cluster UK population into similar groups of lifestyles.

  • MOSAIC developed by Experian Systems, UK is based on an analysis of post codes (similar to India’s PIN codes).

    After a study of households, they have divided the population into 12 lifestyle groupings.


Customers present and potential

Customers – present and potential

1.Numbers by demographics

2.Age and gender spread

3.Family size and structure

4.Income or employment by occupation, industry, trends

5.Spending patterns

6.Population growth, density and trends

7.Vehicle ownerships


Accessibility

Accessibility

1.Site visibility

2.Pedestrian flows

3.Barriers such as railway tracks, streams, slums

4.Type of location zone

5.Road conditions and network

6.Parking

7.Public transports


Competition

Competition

1.Amount and level (intensity)

2.Type and numbers

3.Saturation Index

4.Proximity of key competitors, traders, brand leaders in services (Western Union, the money-transfer people might look at the presence of Indian Post Office which has the money order facility – both delivery as well as receipt).


Costs

Costs

1.Building costs

2.Rent costs

3.Rates payable

4.Delivery and supply (transportation) costs

5.Insurance costs

6.Labour rates

7.Bank interest rates


To assess the viability of a location site

To Assess The Viability Of A Location Site:

  • Count the number of people frequenting the area

  • Say at every five- minute interval,

  • During the busiest periods of the week

  • The traffic patterns would decide the consequent footfall pattern

  • It would be a pointer to the potential spending and purchases if a retail outlet were located in that area


Example

Example:

  • 100 people are passing by the area in five minutes

  • Expenditure per person: weighting the money at say Rs. 5,000 per person

  • Potential for the area would be around Rs 500,000.

  • The whole process is normalized by taking into account whether the location is in the suburb/periphery of the town or downtown and other central places.

  • For every additional 100 people frequenting the area, the potential sales for the retail stores will also increase accordingly.


Alternate assessment of the site

Alternate Assessment of the Site:

  • Use the location factors as a kind of checklist

  • Narrowing it down by salience and scoring the locations on a scale of 1 to 10 (1 = poor and 10 = excellent)

  • Management can decide on the location depending on the final score – whether to go ahead or withdraw.


Catchments area

Catchments Area:

It is the area within a specified boundary, within which people are attracted to the store; and beyond which people are uninterested in the store or are pulled by some other store.


Catchments area analysis

Catchments Area Analysis

  • STEP 1: Calculate the travel time/distance, to the retail stores.

    STEP 2: Analyse the population of the catchments area (could be expressed in terms of age, income, vehicle population, gender, SEC classifications etc).

  • STEP 3: Calculate the weekly potential sales (by projecting weekly purchases of the sample of the population).

  • Further refinement - break down the purchases by category so that a retailer can pinpoint his target customers and decide on his appropriate merchandise-mix.

  • STEP 4: Analyse the existing competition in terms of their footage of retail space as well as retail square feet per customer.

  • STEP 5: Forecast sales as per the data gathered. An analysis of data from competing stores will give a retailer wanting to enter a new area a realistic picture of the nature of demand and potential, which will aid him in choosing the location.


Gravitational model

Gravitational Model

  • Developed by W. J. Reilly, in 1929

  • Proposes that consumers are attracted to a certain location because of its pull effect or its drawing power as opposed to that of other outlets

  • The model works on the principle of gravitational attraction

  • It must include two counterpoises (attractions) and their relative ‘weights’ - two retail outlets and their drawing powers.


Gravitational model includes the following factors

Gravitational Modelincludes the following factors:

1.The population of two competing locations, say X and Y. Thus population of location X would be P(X) and that of Y would be P(Y).

2.The distance between the two locations in kilometres, say D.

3. A point of indifference between the two locations to enable the marking of respective catchments areas.

4. The point of indifference is a certain geographic outer limit, wherein the customers would be uninterested in either of the two stores located at X or Y.


Gravitational model1

Gravitational Model

  • ‘CX’ is the outer limits of the catchments area of location X when a customer travels from X to Y

  • ‘D’ is the distance in kilometres along a main road between locations X and Y;

  • ‘P(X)’ is the population of location X

  • ‘P(Y)’ is the population of location Y


Gravitational model2

Gravitational Model

Cx = Outer Limits

X

Y

‘D’ km

P (Y)

P(X)


Growth option

Growth Option:

How would you grow?


Growth model ansoff

Growth Model: Ansoff

OLD PRODUCT

NEW PRODUCT

OLD MARKET/ CUSTOMERS

NEW MARKET/ CUSTOMERS


Growth model ansoff1

Growth Model: Ansoff

OLD PRODUCT

NEW PRODUCT

MARKET PENETRATION STRATEGY

Convince its customers to consume more of its present offers

OLD MARKET/ CUSTOMERS

NEW MARKET/ CUSTOMERS


Growth model ansoff2

Growth Model: Ansoff

OLD PRODUCT

NEW PRODUCT

MARKET PENETRATION STRATEGY

Convince its customers to consume more of its present offers

OLD MARKET/ CUSTOMERS

MARKET DEVELOPMENT STRATEGY

Service firm continues with its old offers but now to different customers

NEW MARKET/ CUSTOMERS


Growth model ansoff3

Growth Model: Ansoff

OLD PRODUCT

NEW PRODUCT

PRODUCT DEVELOPMENT STRATEGY

Give newer bouquet of offers, satisfying different needs for its present customers

MARKET PENETRATION STRATEGY

Convince its customers to consume more of its present offers

OLD MARKET/ CUSTOMERS

MARKET DEVELOPMENT STRATEGY

Service firm continues with its old offers but now to different customers

NEW MARKET/ CUSTOMERS


Growth model ansoff4

Growth Model: Ansoff

OLD PRODUCT

NEW PRODUCT

PRODUCT DEVELOPMENT STRATEGY

Give newer bouquet of offers, satisfying different needs for its present customers

MARKET PENETRATION STRATEGY

Convince its customers to consume more of its present offers

OLD MARKET/ CUSTOMERS

MARKET DEVELOPMENT STRATEGY

Service firm continues with its old offers but now to different customers

NEW MARKET/ CUSTOMERS

DIVERSIFICATION

STRATEGY

The service firm targets entirely new customers with different offers


You ve got babies and you ve got money

You’ve got babies, and you’ve got money:

How would you allocate your resources?

How would you categorize your SBUs?


If you don t have a competitive advantage don t compete

If you don’t have a competitive advantage, don’t compete

- Jack Welch, GE


Ge business screen

GE Business Screen

SBU Strength/Business Position

HIGH

MED I UM

LOW

INVEST

HIGH

PROTECT

(Selectively invest)

PROTECT

(Selectively invest)

INVEST

MED I UM

Market Attractiveness

PROTECT

(Selectively invest)

PROTECT

(Selectively invest)

INVEST

HARVEST

PROTECT

(Selectively invest)

DIVEST

HARVEST

LOW


Market attractiveness

Market attractiveness:

  • Market size

  • Market growth rate

  • Market entry barriers

  • Competition – number and type of competitors

  • Technological requirements

  • Profit margins, etc.


Sbu strength business position

SBU strength/business position:

  • SBU size

  • Market share

  • Research and development capabilities

  • Power or strength of differential advantage(s)

  • Cost controls

  • Production capabilities and capacities

  • Management expertise and depth, etc.


Ratings of the sbus

Ratings of the SBUs

  • Criteria are assigned weights

  • Each SBU/product is rated with respect to all criteria

  • Overall ratings are calculated for all SBs/products

  • Each SBU/product is then rated as high, medium or low according to market attractiveness and then business position/SBU strength.


Pros cons portfolio models

Constant product audit through profitability screen

Judicious mixture of portfolio-mix

Too narrow focus on costs

Nothing on innovation

No weightage to risks

Pros & cons: portfolio models


Where to grow

Where To Grow

  • Related/Unrelated Diversification

  • Value Chain


Related and unrelated business

RELATED AND UNRELATED BUSINESS

OPENING NEW BUSINES LINES

CUSTOMERS

“Coming Closer”

Going “Upstream” or Forward Integration

NEW ENTRANT

VERTICAL INTEGRATION

CO.

“Downstream” or Backward Integration

SUPPLIERS

SUPPLIERS

SUPPLIERS

“ComingCloser”


Competition1

Competition

?


Competition2

ICICI Bank

Air Deccan

Titan Watches

TBZ ?

Volvo ?

Archie’s Gift Gallery ?

Competition


Competitor typology1

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

SIMILAR SERVICE OFFER

DIFFERENT SERVICE OFFER


Competitor typology2

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

SIMILAR SERVICE OFFER

DIRECT COMPETITION

SBI vs. ICICI Bank vs. IDBI Bank

DIFFERENT SERVICE OFFER


Competitor typology3

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

INDIRECT COMPETITION

A mall has food court (restaurants), sports courts, multiplexes (entertainments) retail stores etc.

SIMILAR SERVICE OFFER

DIRECT COMPETITION

SBI vs. ICICI Bank vs. IDBI Bank

DIFFERENT SERVICE OFFER


Competitor typology4

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

INDIRECT COMPETITION

A mall has food court (restaurants), sports courts, multiplexes (entertainments) retail stores etc.

SIMILAR SERVICE OFFER

DIRECT COMPETITION

SBI vs. ICICI Bank vs. IDBI Bank

SUBSTITUTE COMPETITION

Archie’s Gallery and Titan/Tanishq can both compete for the gift market

DIFFERENT SERVICE OFFER


Competitor typology5

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

INDIRECT COMPETITION

A mall has food court (restaurants), sports courts, multiplexes (entertainments) retail stores etc.

SIMILAR SERVICE OFFER

DIRECT COMPETITION

SBI vs. ICICI Bank vs. IDBI Bank

Barriers of Entry

SUBSTITUTE COMPETITION

Archie’s Gallery and Titan/Tanishq can both compete for the gift market

NEW ENTRANT

An existing player has taken the diversification route to offer a service concept but now becomes a direct competitor

DIFFERENT SERVICE OFFER


Competitor typology6

Competitor Typology

NEED

SIMILAR

NEED

DIFFERENT NEED

OFFER

INDIRECT COMPETITION

DIRECT COMPETITION

SBI vs. ICICI Bank vs. IDBI Bank

Similar Offer

Barriers of Entry

A mall has food court (hunger need), sports courts, multiplexes (entertainments) retail stores (acquisition need) etc.

Different Offer

SUBSTITUTE COMPETITION

NEW ENTRANTS

An existing player has taken the diversification route to offer a service concept but now becomes a direct competitor

Archie’s Gallery and Titan / Tanishq can both compete for the gift market


Real estate investment portfolio management prof c bhattacharjee

Porter’s Five Forces

Model of Competition

Rivalry Among Competing Firms in Industry

Threat of New Entrants

Threat of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitute Products


6 th force value net model

6th Force: Value Net Model

Competitor

Complementor

Supplier

MNC

Customers/ Buyer


Thank you

Thank You


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