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Chapter 3

Situation Analysis II: Company & Competitor Analysis

Disclaimers: All logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used here for educational purposes only. Some material adapted from: Lehmann & Winer, "Analysis for Marketing Planning", 7th ed Some material adapted from: Kotler & Keller, "Marketing Management", 13th ed See book: Sorger, "Marketing Planning" for full bibliography

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Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.1

Strategic Marketing Planning

Chapter 3: Situational Analysis II: Company and Competitor Analysis Table of Contents Topic Company Analysis Description Identify/ Focus/ Culture Go to Market Approach SWOT Analysis Competitive Research Competitor Identification Market Share Estimation SWOT Analysis Predicting Future Strategies Competitive Analysis Results Market Research Process Research Plan Development Analyzing the Data Presenting the Findings Making the Decision

Competitor Analysis

Market Research

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.2

Company Analysis: Identity/ Focus/ Culture

Term Identity Focus Culture Description What makes the business different from others Emphasis on a particular market segment or product Shared experiences, beliefs, and norms that characterize an organization (Kotler, MM)

The movie "Office Space" portrayed a company with a distinct culture

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.3

Company Analysis: Go To Market Approach

Term Go-to-Market Value Proposition Delivery Mechanism Description Delivery mechanism for firm's value proposition Benefit firm delivers through its offering Distribution channels used to deliver offering Example: UPS Store vs. drop box vs. truck Methods to guide customers through sales process Initial contact Fulfillment

UPS goes to market through several delivery mechanisms

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.4

Company Analysis: Company Strengths

Category People Products/ Services Description Leadership, Skill, Knowledge, Background, Character Steve Jobs vs. John Sculley Competitive advantage through technology: Subaru Distinguishing features: Apple Value-added services: Nordstrom, Lexus Reputation: L.L. Bean Customer Service: Amazon.com Loyal, happy, committed customer base: Buick

Examples of great people, great products, and great service

Company Customers

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.5

Company Analysis: Company Weaknesses

Category People Products/ Services Company Customers Description Inexperience, Poor judgment, Unethical: Madoff Poor design: Microsoft Vista Reputation: AIG Unhappy customers: Moving companies, ...

Examples of people, products, and service that definitely are not strengths

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.6

SWOT Analysis

Helpful to Organization Strengths Internal to organization - Dominant player - Huge installed base Harmful to Organization Weaknesses - Vista - Perception of bloatware

Opportunities External - Trend: Portability to organization - Trend: Social Networking

Threats - Trend: Cloud Computing - Competitor: Ubuntu (Linux)*

* Asymmetrical threat: Microsoft more of a threat to Ubuntu than vice versa Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.7

Competitor Analysis: Approach

Competitor Information Goals: · Identity/ Focus/ Culture · Go to market approach · SWOT · Market share · Perceptual data · Anticipated strategies

Competitive Research

Competitive Analysis · Identify Competitors · Calculate Market share · Build SWOT · Build profiles

Competitive Results · Summary table · SWOT for each competitor · Perceptual map · Anticipated strategies and counterstrategies

Secondary

Primary

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.8

Secondary Research: Sources

Source Analyst reports Trade press Business press Blogs Collateral Press Releases Annual Reports/10Ks Government Competitor website Description Industry analyst reports on state of market Example: Gartner: Magic Quadrant report: $1,995 Magazines, e-zines; gives insider look at market Example: InfoWorld, CNET.com, CIO, InfoWeek General business magazines, e-zines Example: Fortune, Business Week Gives opinionated view of activities in market Example: http://blogs.gartner.com Competitive collateral can give positioning hints Example: Download brochure from website Competitors post releases on new events Example: See source of quote for targeted role Public companies must issue financial information Example: CEO outlook often suggests next steps Government puts out wealth of info, especially B2B Example: NAICS info, Census info Product details, Customer details, Executive team

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.9

Primary Research: Sources

Source Customers Sales Force Employees Field Service Investment bankers Suppliers Consulting firms Description Ask customers formerly using competitor product Caveat: Some might be limited by NDA agreements Ask sales force about rumors on competition Will be familiar with competitors' sales pitches Non-sales employees can also give market insight Interview many to get multiple viewpoints Technicians in field often see evidence of competitors Example: Customer installed competitor's system Investors/boards have financial knowledge Tip: Look at competitor website to see investors Major suppliers familiar with all competitors Caveat: Might be reluctant to share knowledge Can provide specialized commissioned reports Meet specific needs, but very expensive

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.10

Competition Identification: Four Levels of Competition

Level Direct Competitors Description Near-identical products/ services Often companies are arch rivals Example: Hertz vs. Avis rental cars Category: Rental cars Similar, but not identical products/ services Example: Hertz vs. Taxi Category: Hired transportation Products/ services that satisfy basic need Example: Hertz vs. Public Transit Category: Traveler's transportation Products/ services with same budget Example: Hertz vs. Seeing Broadway show (Stay at airport hotel and save money) Category: Traveler expenses under $200

Indirect Competitors

Need-based Competitors

Budget Competitors

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.11

Four Levels of Competition: Competition Identification

Level Direct Competitors Description Near-identical products/ services 1 Category: Consumer-based PC CPUs 2 Possibilities: Intel, AMD, Motorola 3 Threat: AMD Similar, but not identical products/ services Category: Computer components Possibilities: High-speed RAM, SSD, GPU Threat: nVidia, ATI graphics cards Products/ services that satisfy basic need Category: Consumer-based computers Possibilities: BlackBerry, iPhone, Cloud Threat: Next-generation super smart phone Products/ services with same budget Category: Consumer electronics < $250 Possibilities: Game console, secure networks Threat: Secure networking

Indirect Competitors

Need-based Competitors

Budget Competitors

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.12

Competitive Analysis: Market Share Estimation

Term Market Share Calculation Secondary Research Primary Research Description Proportion of market served by company Share(A) = Revenue(A) . Revenue of Entire Market

Purchase existing industry reports that predict shares Commission specialty firm to determine share

Here, "PC Guy" explains to "Mac Guy" how big the PC market share is

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.13

Market Share Research

Term B2C (Consumer) Description Market research for business to consumer goods Examples: Shampoo, Appliances, Bread Firms: Nielsen, Dun & Bradstreet, Arbitron, others Market research for business to business goods Examples: Welding machines, Enterprise software Firms: Gartner, Forrester, IDC, AMR, others Much information available for free

B2B Analyst Firms Example of free research

B2B (Business)

B2C Analyst Firms

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.14

Competitive Analysis: Predicting Future Strategies

Value Chain Model for Sources of Competitive Advantage

Firm's Infrastructure Human Resource Management (Delivery) Technological Development Procurement Inbound Outbound Marketing Operations Logistics Logistics & Sales Service

Margin

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.15

Competitive Analysis: Predicting Future Strategies

Executive Team Profiles Example: Yahoo

Autodesk - Grew revenues Sun, Digital, 3M On board of Cisco On board of Intel Skadden, el al, LLP M & A specialist Symantec Adobe McKinsey NetApp Sun On board of Cisco M & A specialist

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.16

General Competitor Attack & Counter-Attack Strategies

Encirclement Attack (Overwhelm enemy)

Bank of America vs. other banks: 17,000 ATMs Counterattack: Differentiation: Credit Unions

Frontal Attack (Attack strength)

Microsoft vs. Google (Bing) Counterattacks: Invade attacker territory: FedEx ground delivery Diversification: BP: "Oil" "Energy" Contraction: Sara Lee: Spin off Hanes

Attacker

Defender

Flank Attack (Exploit weakness)

Sunlight vs. Cascade: Spots on dishes Counterattack: Fix weakness, Court action

Guerilla Attack (Random attacks)

Blog posts against major firms Counterattack: Vigilant monitoring

Bypass Attack (Expand into new areas)

New products: Pepsi launched Aquafina before Coke could launch Dasani New geographies: Starbucks expanded into China before competitors New technologies: Nintendo leapfrogged Sony with Wii

(1) Adapted from Kotler & Keller, "Marketing Management", 13th ed, Pearson, 2009. Page 306

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.17

Competitive Analysis Results: Comparison Table

Criteria Objectives Strategies Differential Adv. Expected future Ben & Jerry's Haagen-Dazs Starbucks Godiva Get foothold Go upscale Luxury symbol Emphasize luxury Market share=38% Market share=42% Get foothold Overtake H-D Increase lead Promotions Social respons. 2000: purchased by Unilever Strong finances; Spend on ads Indulgence Global brand New flavors; Use Nestle conn. to build distrib. Low price Extend coffee Expand flavors outside of coffee

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.18

Competitive Analysis Results: Perceptual Map

- Perceptual Maps: Show how brands compare - Axes labels and placement through focus groups - Example: Computer operating systems - Evaluation criteria: Interoperability, + Ease of Use: Reliability, Intuitive Scalability, Security Ease of Use, Affordability

- Interoperability: Technical Expertise + Interoperability: Plug n' Play

- Ease of Use: Frustrating

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.19

Market Research: Approach

Define Problem & Research Objectives

Develop Research Plan

Gather Data

Analyze Data

Present Findings

Make Decision

Example: Should American Airlines introduce Internet service? Too general; Change to: 1. Should American offer an Internet connection? 2. If so, should it be on First Class only? 3. What price should it charge? 4. On what planes and routes should it offer the service? Important: Select Evaluation Criteria for Decision! Maximize Revenue? Profit? ROI? Customer Satisfaction?

(1) Kotler & Keller, "Marketing Management", 13th ed, Pearson, 2009. Pages 91 - 103

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.20

Market Research: Development of Research Plan

Contact Method

- Mail questionnaire - Telephone interview - Personal interview - Online interview

Data Sources

- Secondary - Primary

Sampling Plan

- Sampling unit - Sample size - Sampling procedure

Research Plan

Research Approaches

- Observational Research - Ethnographic Research - Focus Group Research - Survey Research - Behavioral Data - Experimental Research

Research Instruments

- Questionnaires - Qualitative Measures - Technological Devices

(1) Kotler & Keller, "Marketing Management", 13th ed, Pearson, 2009. Pages 91 - 103

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.21

Market Research: Research Approaches

Approach Observational Ethnographic Description Watch what people do with product Example: Observe customer using Quicken program Similar to anthropological research Immerse into consumers' lives to understand them Bank of America found that most women round up Result was "Keep the Change" program Gathering of 6 ­ 10 people with moderator Non-random group; typically heavy users of product Goal: Understand motives behind behaviors Problems: Seen as artificial; dependent on moderator Analyze records of behavior Supermarket scanning data, Online purchases Scientifically valid research Set up matched groups: Target group vs. Control group Are differences in observed responses statistically significant? See next slide

Focus Group

Behavioral Experimental

Survey

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.22

Market Research: Surveys & Research Instruments

Approach Surveys Instruments Description Goal: Measure opinions of large group using instrument Qualitative measures: Unstructured, open-ended questions Usually conducted one-on-one with respondent Questionnaires: Closed-end and Open-end questions Usually closed-end questions for online surveys Technological devices: Electronic means to gather data Example: Galvanometer to measure response to ad Typical: Do qualitative study first to small group of respondents Follow up with questionnaire to large group Popular: www.surveymonkey.com; Effective and free Design survey, Collect responses, Analyze results

Approach Online

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.23

Questionnaire Questions: Closed-End

Name Dichotomous Multiple choice Description 2 possible answers 3+ possible answers Example Are you male or female? Male___ Female_X_ How many classes are you taking? 1_X_ 2___ 3 or more___ How much homework is assigned? Too little------------------X----Too much Small class sizes permit more focus Strongly Disagree__ Disagree__ Not Sure__ Agree__ Strongly Agree__ In-class videos to me are: Extremely important__ Very important__ Somewhat important __Not very important __ Not important__ The teaching quality of this course is: Poor__ Fair__ Good__ Very Good__ Exc.__ If the same instructor offered another course: Not buy__ Probably not buy__ Not sure__ Probably buy__ Definitely buy__

Semantic Differential Scale with bipolar words Likert Scale Agreement/Disagreement

Importance Scale

Rates importance

Rating Scale Intention to Buy

Rates Poor to Excellent Rates Intent to Buy

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.24

Questionnaire Questions: Open-End

Name Unstructured Word Association Description Discussion question Example What is your opinion of this course? Answer_______________________________

Mention first word you think of What comes to mind when you think of: (Strength of association) This class_____________________________ The textbook___________________________ The teacher____________________________ When I pick a class, I look for: ______________________________________ "I went to last week's class, and noticed that we didn't have a video. I felt the following way:" ______________________________________ Fill in the balloon for the picture on the left Write a story about the picture on the right TAT Story Picture:

Sentence completion Complete the sentence Story completion Complete the story

Balloon picture TAT

Fill in the empty balloon Thematic Apperception Test

Balloon Test Picture:

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.25

Market Research: Sampling Plan

Approach Description Sampling Unit Who should we survey? Generally best to survey target market Sample Size How many people should we survey? Large sample sizes More statistically significant Generally, best to sample at least 1% of population (min. 20) How should we choose the respondents? Probability sample: More accurate Allows confidence limits to be calculated for sampling error Makes sample more representative Non-probability sample: Cheaper and faster

Procedure

Market research sampling procedures are often complicated

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.26

Market Research: Probability and Non-Probability Samples

Probability Samples Term Simple Random Sample Stratified Random Sample Cluster (Area) Sample

Simple Random Sample

Description Every member has an equal chance Example: Picking phone numbers at random Divide population into groups (such as age) then pick samples from the groups Divide population into areas (like city blocks) then pick samples from the areas

Stratified Random Sample Cluster (Area) Sample

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.27

Market Research: Probability and Non-Probability Samples

Non-Probability Samples Term Convenience Sample Judgment Sample Quota Sample

Convenience Sample

Description Select most accessible population member Example: Next 10 people walking into office Select those likely to give accurate information Example: Members of online product forum Select certain number of people per category Example: 5 people in each age group

Judgment Sample Quota Sample: Pick 1 of each group

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.28

Market Research: Analyzing Information

Procedure Processing Description Cleansing: Delete/ correct known bad data Coding: Assigning numbers to open-end questions Example: "Why selected?": Price=1; Quality=2 Frequency table: # of respondents for each answer Cross-tabulations: Frequency counts with 2+ variables Mean, Mode, Standard Deviation, Variance, Range Tests: Chi-square; K-S test (Goodness of Fit) Tests: Z-Test (Rating significantly higher than mean) Tests: t-Test (Like Z-test, but for small sample sizes)

Cross-tabulation

What OS do you prefer? Operating System Windows 7 Windows Vista Windows XP Apple OSX Linux Total 38% 8% 22% 16% 16% 18-25 14% 1% 2% 7% 5% 26-35 13% 3% 5% 5% 5% 35-50 11% 4% 15% 4% 6%

Tabulation Statistics

One-way tabulation

What OS do you prefer? Operating System Windows 7 Windows Vista Windows XP Apple OSX Linux Total 38% 8% 22% 16% 16%

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.29

Market Research: Presenting the Findings

Topic Objectives Methodology Description State background and objectives of research How research was conducted Qualitative: What questions? How asked? How many people? Quantitative: How was survey conducted? How many people? Graphs helpful for displaying research results Bar Chart: Good for showing respondent preference Pie Chart: Good for showing parts of a whole Histogram: Good for showing frequency of results

Pie Chart

"40% of students use Gmail"

Findings

Bar Chart

"Most users prefer Windows 7" Windows 7 XP Linux Apple OSX Vista

Histogram (Frequency Chart)

"Most users are 25-35"

Age

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.30

Market Research: Making the Decision

Topic Statistics Solutions Criteria Triangulate Description Tests will indicate degree of confidence in data Generate multiple solutions to solve problem at hand Review evaluation criteria set forth in beginning of research Select solution that maximizes decision criteria Use multiple data points to confirm decision Similar to how sailors locate their position from multiple points Avoid relying on just one data point

Use triangulation to confirm decision using multiple data points

Marketing Planning © Stephan Sorger 2010: www.stephansorger.com; Ch. 3 Situation Anyl. II: 3.31

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