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External Analysis. OVERVIEW. External Analyze Global Societal (Macro) Factors Analyze Global Task (Micro) Factors Industry Competitors. SOCIETAL (MACRO). TECHNOLOGICAL. TASK (MICRO). Industry. ECONOMIC. POLITICAL/ LEGAL. INTERNAL. Competitors. SOCIOCULTURAL. INDUSTRY. Definition:

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overview
OVERVIEW
  • External
    • Analyze Global Societal (Macro) Factors
    • Analyze Global Task (Micro) Factors
      • Industry
      • Competitors
slide3

SOCIETAL (MACRO)

TECHNOLOGICAL

TASK (MICRO)

Industry

ECONOMIC

POLITICAL/

LEGAL

INTERNAL

Competitors

SOCIOCULTURAL

industry
INDUSTRY
  • Definition:
    • Group of firms producing a similar product or service
    • Often defined by government (SIC codes), analysts (Valueline and Investment Analyses)

Share Analysis & Forecast

  • Financial Trends & Forecast
  • Porter’s 5 Forces of Industry Competition
overall assessment of competitiveness
Overall Assessment of Competitiveness

Potential

Entrants

  • Five Forces Model

Rivalry

Among

Firms

Buyers

Suppliers

Substitutes

industry analysis
Industry Analysis
  • Market Share Analysis
    • Definition of “market”
    • Definition of competitors
  • Examples
segments
Segments
  • Business Segments
    • Johnson Controls has 4
      • Auto; Controls; Plastic; Battery
  • Geographic Segments
    • U.S.; Europe; Pacific, etc.
  • Customer Segments
    • home market; business market; government market.
  • Market Segments
    • fruit-beverage market
    • alcoholic beverage market
two segment questions
Two Segment Questions
  • External question:
    • What share of the total market do we have?
  • Internal question:
    • How much does that market contribute to our:
      • Sales; Net Income; Assets
industry analysis con t
Industry Analysis Con’t.
  • Financial Analysis
    • Sales
    • Net Income
    • Other Indicators
    • Ratios
competitor analysis
Competitor Analysis
  • Who Are the Existing and Potential Competitors?
  • What Strategic Groups Can Be Identified?
  • What Are Their Levels of Sales, Share and Profits?
  • What Are Their Growth Trends?
  • What Are Their Strengths, Weaknesses, Strategies?
u s restaurant chains
U.S. Restaurant Chains
  • Strategic Groups

High

Red Lobster

Olive Garden

Bob Evans

Shoney’s

Denny’s

Pizza Hut

Chi-Chi’s

IHOP

Price

McDonald

Burger King

Wendy’s

Low

Limited

Menu

Full

Menu

Product-Line Breadth

levels of market competition
Levels of Market Competition
  • Product Form - brands which directly compete
  • Product Category - products with similar characteristics
  • Generic Competition - products which satisfy the same customer needs
  • Budget Competition - products which compete for the customer’s budget
finding hidden competitors
Finding Hidden Competitors
  • Although there may be many suppliers or brands of a product, customers may see only a small number as suitable
  • 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
market structure analysis
Market Structure Analysis
  • Understanding Consumer Perceptions of Products and Brands in a Market
  • Use of Product Mapping Technology to Visually Display Relationships among Products or Brands and Attributes which Define the Space
  • Can be Used to Define Competitors
which competitors to analyze
Which Competitors to Analyze?

Number Depends on

  • Planning Horizon - the longer the time horizon, the more opportunity there is for potential competitors to enter
  • Market Rate of Change - the faster the rate of change the greater the opportunity for new entrants
which competitors to analyze16
Which Competitors to Analyze?
  • Four competitors should always be included:
    • The market leader (largest share)
    • The most profitable competitor
    • The competitor most like us
    • The fastest-growing competitor
competitor strategic profile
Competitor Strategic Profile
  • Provide users with a broad understanding of competitive strategy, including management, goals, capabilities, business/market selection criteria and likely competitive behavior.
  • Include description, direction, assessment of strategies and implications, in terms of threats and opportunities.
information required
Information Required
  • Cost structure of competitors
  • Timing of competitor market entry
  • How competitor will respond to a new product introduction, price change, etc.
  • How competitors are positioned in the market
  • Competitors’ product performance and degree of customer satisfaction/loyalty
benchmarking
Benchmarking

1. Determine which functions to benchmark

2. Identify key performance variables to

measure

3. Identify the “best-in-class” companies

4. Measure performance of “best-in-class”

companies

benchmarking20
Benchmarking

5. Measure your own performance

6. Specify programs and actions to meet

and surpass the “best-in-class”

7. Implement and monitor results

market analysis
Market Analysis
  • How Attractive Is the Market or

Industry and Its Submarkets?

  • What Are the Forces Reducing

Profitability in the Market?

  • What Entry and Exit Barriers?
  • What are the Growth Projections?
  • What are the Cost Structures?
  • What are the Profitability Prospects?
market analysis22
Market Analysis
  • What Are the Alternative
  • Distribution Channels
  • and Their Relative Strengths?
  • What Industry Trends Are
  • Significant to Strategy?
  • What Are the Current and
  • Future Key Success Factors?
customer analysis
Customer Analysis
  • What Are the Major Segments?
  • What Are Their Motivations and Unmet Needs?
market segmentation
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.

market segmentation25
Market Segmentation
  • A managerial strategy that adapts a firm’s 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.
steps in the market segmentation process
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

steps in the market segmentation process27
Steps in the Market Segmentation Process

3. Select Target Segments Which

Represent Best Market Opportunity

4. Design Marketing Program for

Each Target Segment

  • Positioning
  • Marketing Mix
steps in the market segmentation process28
Steps in the MarketSegmentation 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?
bases for consumer market segmentation
Bases for Consumer Market Segmentation
  • State of Being: Demographic, Geographic
  • State of Mind: Psychographic
    • Social Class, Lifestyle
    • Personality, Attitudes, Values
  • Product Usage:
    • Users vs. Non-Users of Brand
    • Heavy vs. Light Users
    • Users vs. Non-Users of Category
    • Usage by Situation
  • Benefits Sought
segmentation criteria
Segmentation Criteria
  • Group Identity
    • Within Segment Homogeneity
    • Between Segment Heterogeneity
  • Sufficient Size
  • Measurable Market Potential
  • Clear Variations in Behavior Relative to Other Segments
  • Influence Via Available Media
    • Segment Can Be Reached Efficiently
summary
SUMMARY
  • External
    • Analyze Global Societal (Macro) Factors
    • Analyze Global Task (Micro) Factors
      • Industry
      • Competitors
  • Why do an External Analysis?
    • To identify opportunities and threats.