MARKET ANALYSIS Session 3 Monday, April

SESSION OUTLINE Company’s micro and macro-environment Analysis of product demand –static –dynamic Competitive analysis Competitive strategy: video « Marketing Warfare »

Macroenvironment: external forces on the company Demographic Economic Natural Techno- logical Political Cultural Company

The Company’s Microenvironment Marketing success depends on others: other departments in the firm suppliers marketing intermediaries customers competitors relevant publics

Microenvironment: company’s internal environment Top management Finance R & D Purchasing Manufacturing Accounting Marketing

DEMAND ANALYSIS Descriptive analysis: –number of customers –average purchase –geographical concentration –20/80 rule Dynamic analysis –Product Life Cycle

Product Life-Cycle Strategies Profits Sales DevelopmentIntroduction Growth Maturity Decline Sales Profit ($) Loss ($)

COMPETITIVE ANALYSIS FLOWS OUT OF CUSTOMER ANALYSIS Understand customers needs and wants Identify current and potential competitors Perform industry analysis, identify suppliers and common intermediaries Understand your competitors Determine competitor strategies (present and future)

COMPETITORS TO CONSIDER CURRENT –market structure analysis –perceptual analysis POTENTIAL (potential entry of new competitors) –remain alert to their possibility –depends on barriers to entry expectations about competitive reactions

BARRIERS TO ENTRY OF NEW COMPETITORS Economies of Scale Lack of Product Differentiation Capital Requirements Access to Distribution Channels Buyer Switching Costs Government Policies and Regulations

HOW DO YOU COMPETE? Offensive Strategies –Concentrate on the competitors’ relative weaknesses –5 types Defense Strategies –Goal is to counter each offensive strategy –6 types

OFFENSIVE STRATEGIES 1) Frontal attack –direct confrontation –most difficult and dangerous 2) Flanking attack –addresses gaps in competition’s market coverage 3) Encirclement –forcing competitor to spread resources thin by probing on many fronts at once 4) Bypass attack –avoids confrontation –diversification 5) Guerrilla warfare –small, intermittent attacks

DEFENSE STRATEGIES 1) Position Defense –fortify firm’s existing position 2) Mobile Defense –Market broadening 3) Preemptive Defense –Attacking first (first strike) 4) Flank-positioning –extend firm’s offerings into new segments to protect existing 5) Counter-offensive Defense –gathering resources and counter-attacking when threatened 6) Strategic Withdrawal

NEXT SESSION Wednesday, April Segmentation, targetting, positioning Chapter 4 Articles in readings package Read: Sally Goodman visits Hydro-Québec