McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Understanding Market Opportunities

3-2 Macro Trend Analysis: A Framework for Assessing Market Attractiveness, Macro Level The demographic environment - While the number of specific demographic trends that might influence one marketer or another is without limit, the following major global demographic trends currently influence the fortunes of many companies, for better or worse: Aging AIDS Imbalanced population growth Increased Immigration Declining Marriage Rates

3-3 Macro Trend Analysis: A Framework for Assessing Market Attractiveness, Macro Level The sociocultural environment - Those that have to do with the values, attitudes, and behavior of individuals in a given society Business ethics Fitness and nutrition The economic environment - Among the most far- reaching of the six macro trend components Economic trends often work, to pronounced effect, in concert with other macro trends

3-4 Macro Trend Analysis: A Framework for Assessing Market Attractiveness, Macro Level The regulatory environment: In every country and across some countries there is a regulatory environment within which local and multinational firms operate Political and legal trends, especially those that result in regulation or deregulation, can have powerful impact on market attractiveness

3-5 Macro Trend Analysis: A Framework for Assessing Market Attractiveness, Macro Level The technological environment: Technological progress is unlikely to abate Developments in telecommunications and computing have led to the rapid convergence of the telecommunications, computing, and entertainment industries The natural environment: Turning problems into opportunities Finding ways to save energy Finding new energy sources Opportunities in developing green products Impact of depletion of natural resources

3-6 Exhibit The Major Forces that Determine Industry Attractiveness

3-7 Challenges In Macro-level Market And Industry Analysis In order to analyze the attractiveness of one’s market or industry, one must first identify exactly which market or industry is to be analyzed On the market side, the challenge often lies in sizing the relevant market On the industry side, there’s the question of how narrowly or broadly to define one’s industry

3-8 Challenges In Macro-level Market And Industry Analysis Information sources for macro-level analyses: Trade associations and trade magazines Websites of local, state, and federal governments The key outputs of a competent macro trend analysis should include both quantitative and qualitative data

3-9 Understanding Markets at the Micro Level Some tests to be met for the market offering to be attractive: There’s a clearly identified source of customer pain, for some clearly identifiable set of target customers, which the offering resolves The offering provides customer benefits that other solutions do not The target segment is likely to grow There are other segments for which the currently targeted segment may provide a springboard for subsequent entry

3-10 Understanding Industries at the Micro Level Opportunities are attractive when the company itself meets most or all of the following tests: It possesses something proprietary that other companies cannot easily duplicate or imitate The business has or can develop superior organizational processes, capabilities, or resources that others would find it difficult to imitate or duplicate It’s business model is economically viable

3-11 The Team Domains: The Key to the Pursuit of Attractive Opportunities Opportunities are only as good as the people who will pursue them Some crucial questions Does the opportunity fit what we want to do? Do we have the people who can execute on whatever it takes to be successful in this particular industry? Do we have the right connections?

3-12 Mission, Aspirations, and Risk Propensity Everyone and every company has views on how much risk is acceptable A particular opportunity must also measure up to the expectations of the people who will pursue it Whatever the tests for a given individual or company, they must be met if an opportunity is to be deemed attractive

3-13 Ability to Execute on the Industry’s Critical Success Factors Two key questions to ask in identifying one’s critical success factors (CSFs): Which few decisions or activities are the ones that, if gotten wrong, will almost always have severely negative effects on company performance? Which decisions or activities, done right, will almost always deliver disproportionately positive effects on performance?

3-14 It’s Who You Know, Not What You Know The people who are the best connected will be the ones who are best placed to change strategy before others know the winds have changed Having a well-connected team in place enhances the attractiveness of the opportunity itself The team is more likely to be able to ride out the inevitable winds of change

3-15 Putting the Seven Domains to Work If you or your company chooses to pursue unattractive opportunities, you’ll face tough sledding The seven domains are not additive Opportunities don’t just sit there They change and may be further developed

3-16 Anticipating and Responding to Environmental Change Impact and timing of event Opportunity/threat matrix: Enables the examination of a large number of events in such a way that management can focus on the most important ones

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Understanding Organizational Markets and Buying Behavior

3-18 Types of Buying Situations Straight rebuy: Involves purchasing a common product or service the organization has bought many times before Modified rebuy: Occurs when the organization’s needs remain unchanged, but buying center members are not satisfied with the current product or the supplier New-task buying: Occurs when an organization faces a new and unique need or problem

3-19 Exhibit The Organizational Decision- Making Process for New-Task Purchases

3-20 The Marketing Implications of Different Organizational Purchasing Situations Extensive purchasing process applies primarily to new- task purchases, where an organization is buying a relatively complex product or service for the first time At the other extreme is the straight rebuy “In” suppliers have a major competitive advantage “Out” suppliers must attempt to interest the buyer in modifying the purchase criteria

3-21 The Marketing Implications of Different Organizational Purchasing Situations Developing long-term buyer–supplier relationships Trust between supplier and customer develops person- to-person Conditions favoring trust and commitment: A firm is more likely to trust and develop a long-term commitment to a supplier when that supplier makes dedicated, customer-specific investments

3-22 Purchasing Processes in Government Markets Federal, state, and local governments are major buyers of many goods and services Government organizations: Tend to require more documentation and paperwork Require suppliers to submit bids, and contracts are usually awarded to the lowest bidder Purchase on a negotiated or “cost-plus” contract basis

3-23 Exhibit Categories, Characteristics, and Marketing Implications of Goods and Services Bought by Organizations

3-24 Exhibit Categories, Characteristics, and Marketing Implications of Goods and Services Bought by Organizations