session market research and analysis session outline strategic analysis industry analysis market...

Session

Market Research and Analysis

Session Outline

Strategic Analysis Industry Analysis Market Analysis Competition Market Segmentation

This Session Weekly Activity: Risk Action Plan An action plan provides milestones for updating progress as

well as ongoing reporting. Managers need to know what is to be accomplished, how it will be accomplished, by whom and within what timeframe. Before an action plan can be enacted it needs to be developed. Thinking about risk analysis, management and control tasks, undertake the following activities:

Specify tasks Sequence tasks Determine resource needs Establish a task schedule Assign responsibility for each task Describe the expected results Specify methods of monitoring these results.

Incorporate these activities into an action plan.

Research Information

Starting point for effective business planning

Businesses operate in a dynamic environment and factors continually change

Relates to both external and internal operating environments and its worth is dependent on its: Relevance Currency Accuracy

Research Scanning

Collecting and analysing information about the surroundings that impact on an organisation in order to detect important changes or trends that can affect that organisation’s strategies.

Environmental Scanning

Can be broken down into four significant areas:

General business (Strategic Analysis) (Mega-Environment) – eg. Country Scan

Industry business (Industry Analysis) (Macro-Environment) – eg. Industry Scan

Local business (Local Area Market Analysis) (Micro-Environment) – eg. Market/Competition Scan

Internal business (Operational Review) (if applicable) – eg. Organisational Analysis

THE FIRM

Operating Environment (Global and Domestic)•Competitors •Labor

•Suppliers•Customers

Industry Environment (Global and Domestic)•Entry barriers•Supplier power

•Buyer power•Substitute availability

•Competitiverivalry

•Creditors

Remote Environment (Global and Domestic)•Economic•Social•Political

•Technological•Ecological

Environmental Scanning

Topic Example Video

The following video explains what is STEEP, PEST, PESTLE or SLEPT analysis.

Take note of the key points. http://www.youtube.com/watch?

v=B7drEvHo7vA

Strategic Potential These are Trends, Patterns, Influences and

Events that shapes the environment which the industry the organisation operates in is a part of. It is often referred to as a STEEP scan.

Socio-cultural Technological Economic Ecological (Climatic/Natural) Political/Legal.

Social Environment

Consists of the behaviour of individuals and groups of individuals in society.

Social Changes

What are the present and likely sociological changes on a national and on a global basis.

How will they affect consumer attitudes, consumer demand and buying habits, government legislation, employer responsibilities etc?

How will they affect population trends, lifestyle trends, employment trends, disposable income trends, attitudes to work and recreation.

How could these directly affect the industry and in-directly affect the organisation?

Activity: Social Problems

In groups of 3 - 4, debate the role of marketing can and should play in treating the following major social problems: air pollution drug abuse the high unemployment rate among young

people. Each to present their findings. Time: 10 - 15 minutes.

Technological Environment

Involves any scientific action that develops new ways of doing things.

Technological Changes

What new technologies are emerging, what technologies are about to be introduced into existing products?

What new product areas are being considered? How will these new technologies and new product

areas affect the industry? How will they affect the way business is conducted? What effects technological advances are having in

the areas of computing, data transmission and telephony, engineering, banking, financing, and retailing?

How could these affect the industry and organisation?

Activity: Technology

In groups of 3 - 4, explain how an organisation’s marketing programs (such as QUT or TAFE Queensland) might be influenced by environmental technology factors.

Each to present their findings. Time: 5 - 10 minutes.

Economic Environment

Includes all factors that impact on the income and wealth building of society.

Economic factors seem to go through a business cycle that is from prosperity to recession to recovery.

This cycle can happen across the whole economy or within certain industries.

Economic Changes What could happen nationally and on a global

scale? What are the forecasts for economic growth,

inflation, interest rates, exchange rates, labour costs and material costs?

What are the unemployment and or employment forecasts?

How could this affect disposable incomes, consumer demand and prices?

Economic Changes

What are interest rates likely to do, what will the money supply be like, how are the global stock markets expected to perform and what will the availability of loan and venture capital be like?

How is global trade performing, what effects does it have on the balance of trade and price of commodities?

How could these directly affect the industry and indirectly affect the organisation?

Activity: Economic Position

In groups of 3 - 4, consider the current economic position of Australia in terms of inflation, recession or moderate growth and identify how the economy influences the marketing decisions for a shopping good such as flour, sugar or rice and a luxury good such as a Tag watch.

Each group to present their findings. Time: 10 - 15 minutes.

Ecological

Of importance for potential primary producers.

What natural factors, ie weather patterns, climatic changes, availability of natural resources (eg. water) that business will rely on are relevant?

Will the physical environment (geographic) and availability of raw materials assist in industry and organisational growth?

Such information is important when determining seasonal variations in level of sales.

Activity: Conservation

In groups of 3 - 4, discuss the various options available to assist rural Australia long-term in particular our agriculture sector.

How might Australia sustain it’s ecology as well as ensure the viability of it’s agriculture sector?

What should Australia do to drought proof itself? Is this at all possible?


Political & Legal Environment

Is composed of the rules and regulations imposed by government on business firms, and the political interest groups that affect it.

Political/Legal Changes

Need to consider the likely political changes that may occur locally, nationally and on a global scale.

If there is a change of government are they likely to invoke new legislation on safety, employment, liability etc?

Are they likely to make changes to the tax rates, tariffs, quotas etc?

On a global scale, what could developing nations and/or developed nations do that could have ramifications in your industry?

What global crises - terrorism, wars, revolutions, famines - may occur?

How could these affect the industry and organisation?

Activity: Legislation

In groups of 3 - 4, give some examples of the effects of marketing legislation on individual buying, recreation and other everyday activities.

Does the group believe these laws are effective? If not, what changes would the group recommend?


Mega-Environment Conclusions

What conclusions and assumptions can be drawn from the Strategic Analysis?

How will these conclusions and assumptions impact on the general business environment that affects society and the nation as a whole?

Trends & Patterns

What are the trends and patterns occurring, such as in computer technology, telephony, business management, employee and employer relationships, lifestyles, crime, morality, private and corporate banking, financing, retailing, transportation, wholesaling etc?

What effect could these trends have within society?

Business Research

Business intelligence Monitor business trends and, new

developments. Study population growth models (ABS). Review of government publications, industry

periodicals, news releases. Attending conferences and exhibitions.

Activity: Environmental Forces

In groups of 3 - 4, identify some significant STEEP analysis forces that would indirectly (and possibly directly) affect the marketing programs of: a fast-food restaurant TAFE a Fortitude Valley local nightclub Mircosoft


Topic Example Video

The following video explains the benefits of using government statistics for research.


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Statistical Information Sources Australian Bureau of Statistics Independent Research Centres Industry Associations Government Departments and Agencies Banks and other Financial Institutions Business Publications News Media Reports Libraries Educational Institutions Telephone Directories.

Australian Bureau of Statistics

The ABS is the main source of published statistical information. (www.abs.gov.au)

Areas include: Population statistics Industry statistics Household expenditure statistics Housing statistics Foreign trade statistics Economic performance indicators.

Industry Business Scan

This phase assists in seeing the “big picture” of the industry

Analysis of the current industry situation where are we now and what are the likely developments in the industry.

Provides better understanding of how the industry functions how the industry players interact and how the organisation fits into the picture.

Analysis Purpose

The purpose is to understand the industry in which the business operates in and needs to consider both supply and demand conditions.

Factors likely to affect supply conditions include: Nature and extent of competition Availability and terms of stock and raw materials Business resources required Barriers to enter industry

Factors that will affect demand conditions include: Level of economic activity Buyer characteristics and behaviour for industry Demand patterns in the industry

Topic Explanation Video

The following video explains industry analysis and how it also relates to market analysis.


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Distribution, pricing, promotion, methods of selling, service/field support, R&D, legal tactics

FMCG - reliance on carrying & forwarding agent (C&A) - Industry practice

Textiles - Wholesalers - Semi wholesalers - retailers + retail showrooms (few players)

Industry Practices

Potential value of industry analysis seen by assessing the performance of different industries over time S&P’s monthly stock price index over a long

tome period shows industries perform differently over time

Stock performance affected by industry Industries in decline should be avoided

Industry Performance Over Time

Consistency of industry performance Maintaining positions in growth industries

leads to better returns than otherwise Can industry performance be predicted

reliably on the basis past success? Rankings inconsistent over time Industries with recent poor performance

should not be ignored

Industry Performance Over Time

Historical Performance Historical record of sales and earnings

growth and price performance should be considered

Although past cannot be simply extrapolated into the future, does provide context

Competitive conditions in industry Competition determines an industry’s ability

to sustain above-average returns

Qualitative Aspects

Product life cycle, rate of growth, changes in buyer needs, innovations in products/ processes, entry & exit of firms, changes in regulatory environment governing the industry

Emerging Trends

Likely direction of interest rates and which industries most affected by a significant rate change should be considered

Industries most affected by possible political events, new technology, inflation should also be considered

Forecasting Industry Trends

Industry Trends

Marketing intelligence Monitor industry trends and, new

developments. Study population growth trends. Review of government publications, industry

periodicals, news releases. Attend exporting conferences and

exhibitions.

Industry Assumptions

What assumptions can be drawn from the Industry Analysis?

How will these assumptions affect the organisation and what opportunities does it offer the business?

Industry Situation

Size and Nature of the Industry Competitive Analysis Industry rivalry Entry Barriers Market Research (existing) Industry Assumptions and Opportunities

Size and Nature of the Industry

Describe the industry as it is currently. Describe how it has developed and how it is

expected to develop over the life of the plan. Describe how the industry is segmented and

the rivalry between segments. Provide information on the size of the industry,

both in unit volume and dollar volume. Describe the main players in the industry - competitors and suppliers.

Size and Nature of the Industry

Describe what the outlook for the industry is, both short term and long term. Describe the market growth potential.

Describe any technological advances in the industry that are likely to occur.

Explain what "the barriers to entry" are for new players entering the industry.

Industry Boundaries

Helps executives determine arena in which their firm competes

Focuses attention on firm’s competitors Helps executives determine key factors for

success Gives executives another basis on which to

evaluate their firm’s goals

Evolution of industries over time creates new

opportunities and threats

Industry evolution creates industries within

industries

Industries are becoming global in scope

Industry Boundaries

Industry Issues

What part of the industry corresponds to our firm’s goals?

What are the key ingredients of success in that part of the industry?

Does our firm have the skills needed to compete in that part of the industry?

Will the skills enable us to seize emerging opportunities and deal with future threats?

Is our definition of the industry flexible enough to allow necessary adjustments to our business concept as the industry grows?

By stage in their life cycle Helps determine the health and future

prospects of the industry Pioneering stage

Rapid growth in demand Opportunities may attract other firms and

venture capitalists Difficult identify likely survivors

Analyzing Industries

Industry Life Cycles

Stage 1 Stage 2 Stage 3 Stage 4

Start-up Consolidation Maturity Decline

Beginning Rapid Stabilization and Deceleration

Development Growth Market Maturity of Growth

Expansion stage Survivors from the pioneering stage are

identifiable Firm operations more stable, dependable Considerable investment funds attracted Financial policies firmly established Dividends often become payable

Attractive to a wide group of investors


Stabilization or maturity stage Growth begins to moderate Marketplace is full of competitors Costs are stable rather than decreasing

Limitations of life cycle approach A generalization that may not always apply Tends to focus on sales, market share, and

investment in the industry


Governmental effects Regulations and policies have significant

effects on industries Structural changes in how economy creates

wealth Western economies continue to move from

an industrial to an information/communication society

Structural shifts can occur even within relatively new industries


To forecast long-term industry performance you should ask: Which industries are obvious candidates

for growth and prosperity? Which industries appear likely to have

difficulties as the country’s economy changes, ie from industrial to an information-based economy?

Future Industry Prospects

Waste Recycling?

Analysis of industries by their operating ability in relation to the economy as a whole Some industries move closely with the

business cycle, others not Growth industries

Earnings expected to be significantly above the average of all industries

Growth stocks suffer less during a recession

Business Cycle Analysis

Defensive industries Least affected by recessions and economic

adversity Cyclical industries

Most affected by recessions and economic adversity

“Bought to be sold” Counter-cyclical industries exist as well


Interest-sensitive industries Particularly sensitive to expectations about

changes in interest rates Carefully analysis of business cycle and likely

movements in interest rates help make better buy/sell decisions

Industry knowledge is valuable in selecting or avoiding industries


Industry Analysis Questions

1. What are the industry dominant economic traits?

2. What competitive forces are at work in the industry and how strong are they?

3. What are the forces of change in the industry and what impact will they have?

4. Which companies are in the strongest/weakest competitive position?

5. Who’s likely to make what competitive moves next?

6. What key factors will determine success or failure?

7. How attractive is the industry in terms of its prospects for above average profitability?

Topic Explanation Video

The following video is an interview with Dr Michael Porter about his 5 Forces Model.


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Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4. Copyright by TheFree Press, a division of Macmillan Publishing Co., Inc. Reproduced with permission.

Threat ofThreat ofsubstitutessubstitutes

Potentialentrants

Threat ofThreat ofentrantsentrants

Suppliers

BargainingBargaining powerpower

Substitutes

Buyers

BargainingBargaining powerpower

COMPETITIVE RIVALRY

Porter’s 5 Forces Model

Newentrants

Buyers

Suppliers Substitutes

Industrycompetitors

Intensity of rivalry

Intensity of rivalry

Barriers toentry

Barriers toentry

Bargainingpower

Bargainingpower

Bargainingpower

Bargainingpower

Threat ofsubstitutes

Threat ofsubstitutes

Porter’s Five Forces Model

Extent of competitive pressure from producers of

substitutes depends upon:

Buyers’ propensity to substitute

The price-performance characteristics of substitutes.

Threat of Substitutes

Entrants’ threat to industry profitability depends upon the height of barriers to entry. The principal sources of barriers to entry are:

Capital requirements Economies of scale Absolute cost advantage Product differentiation Access to channels of distribution Legal and regulatory barriers Retaliation

The Threat to Entry

Buyer’s price sensitivity Relative bargaining power

• Cost of purchases as % of buyer’s total costs. • How differentiated is the purchased item? • How intense is competition between buyers? • How important is the item to quality of the buyers’ own output?

• Size and concentration of buyers relative to sellers. • Buyer’s information . • Ability to backward integrate.

Note: analysis of supplierpower is symmetric

Buyer’s Bargaining Power

The extent to which industry profitability is depressed by aggressive price competition depends upon:

Concentration (number and size distribution of firms)

Diversity of competitors (differences in goals, cost structure, etc.)

Product differentiation Excess capacity and exit barriers Cost conditions

Extent of scale economies Ratio of fixed to variable costs

Competitive Rivalry

Competitive Rivalry

Entry is likely Substitutes threaten Buyers or suppliers exercise control Competitors are in balance There is slow market growth Global customers increase competition There are high fixed costs in an industry Markets are undifferentiated There are high exit barriers

What is a SWOT Analysis?

A scan of the internal and external environment is an important part of the strategic planning process.

Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T).

Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT Framework

SWOT Analysis Framework Environmental Scan / \

Internal Analysis External Analysis / \ / \

Strengths Weaknesses Opportunities Threats

SWOT Matrix

Competitive AnalysisWho are my competitors?

How do I analyze them?

SWOT Porter’s Five Forces Strategic Group Maps PEST analysis

SWOT analysis and SWOT matrix

Strengths Weaknesses

Opportunities Strength-Opportunity strategies

Weakness-Opportunity strategies

Threats Strength-Threat strategies

Weakness-Threat strategies

A SWOT analysis helps you match your company’s resources and capabilities to threats and opportunities in the competitive environment.

SWOT analysis can be very subjective, but adding weighting and criteria to each factor increases the validity of the analysis. Also completing the SWOT matrix can help you pick the best strategy to implement.

Topic Example Video

The following video explains the SWOT – TOWS matrix and the differences between the two concepts.

Take note of the key points. http://www.youtube.com/watch?v=H8FANR-

2u2Q

Definition

Definition of strength: Capability, ability or activity that the

organisation does well which could be used to improve its competitive position as well as performance or a resource it controls.

Definition of weakness: Exists in any capacity as well as activities

that the organisation does not do well that may cause it to have a weaker competitive position or poorer financial performance or resources it needs but does not possess.

Definition

Definition of opportunity: Opportunities are positive external

environmental factors that an organisation can exploit.

Definition of threat: Threats are negative external environmental

factors to be faced by the organisation.

SWOT: external factors

Opportunities External attractive factors that represent the reason for

an organization to exist and develop. What opportunities exist in the environment which will propel the organization?

Identify them by their “time frames” Threats

External factors, beyond an organization’s control, which could place the organization’s mission or operation at risk. The organization may benefit by having contingency plans to address them should they occur

Classify them by their “seriousness” and “probability of occurrence”

Analysis Overview

Opportunities: Where organisation stands to gain market

share Where to reconsider organisational priorities Threats: Where to refocus organisational efforts

defensively Where to defend from loss of market share

Definition

Definition of problems: Problems are those minor weaknesses that

the organisation can address in the short-term, such as obtaining needed resources.

Definition of vulnerabilities: Vulnerabilities are those minor threats that

the organisation has the resources and capability to control or minimise the impact of in the short-term, such as stockpiling of scarce resources.

Industry Analysis

Opportunities, Vulnerabilities and Threats that relate to the industry that the organization operates in:

Industry situation Industry composition Industry intermediaries (suppliers/agents) Substitute products Competition Type analysis (Industry players) Industry Assumptions & Opportunities

SWOT / TOWS Matrix S-O strategies pursue opportunities that fit

well the company's strengths. W-O strategies overcome weaknesses to

pursue opportunities. S-T strategies identify ways that the firm can

use its strengths to reduce its vulnerability to external threats.

W-T strategies make a defensive plan to prevent the firm's weaknesses from making it susceptible to external threats.

STRENGTHS STRENGTHS

1.1.2.2.3.3.

WEAKNESSES WEAKNESSES

1.1.2.2.3.3.

OPPORTUNITIES OPPORTUNITIES

1.1.2.2.3.3.4.4.

(SO) Strategies Use (SO) Strategies Use strengths to take strengths to take advantage of advantage of opportunities opportunities

1.1.

2.2.

(WO) Strategies (WO) Strategies overcome overcome weaknesses by taking weaknesses by taking advantage of advantage of opportunities opportunities

1.1.

2.2.

THREATS THREATS

1.1.2.2.3.3.4. 4.

(ST) Strategies Use (ST) Strategies Use strengths to avoid strengths to avoid threats threats

1.1.

2.2.

(WT) Strategies (WT) Strategies Minimize weaknesses Minimize weaknesses and avoid threats and avoid threats

1.1.

2.2.

The SWOT matrix

SWOT Interactions

Organisation’sResources/Abilities

Organisation’sOpportunities

Opportunities inthe Environment

Opportunity Gaps

SWOT Diagnosis

Conducting a SWOT diagnosis means to assess the significance of the identified opportunity, influence or threat factors as to it’s level of impact on the organisation

Each factor is rated on a) its degree of significance and b) its probability of occurrence.

SWOT Factor Rating

PursuePursue ReviewReview

IgnoreIgnoreMonitorMonitor

HighHigh LowLowOpportunity SignificanceOpportunity Significance

HighHigh

LowLow

Oc

cu

rre

nc

e P

rob

ab

ility

Oc

cu

rre

nc

e P

rob

ab

ility

Opportunity Matrix

Topic Example Video

The following video outlines how the Micro-environment relates to the Macro-environment.


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Definition—A place where buyers and sellers meet, products or services are offered for sale, and transfer of ownership occurs. Demand made by a group of potential

buyers for a product or service. Market demand factors:

People or firms with needs and wants. Their purchasing power. Their buying behaviour.

Market

It is the maximum number of sales that might be available in an industry for a given period.

A common way to estimate this is as follows:Q = n x q x p

whereQ = total market demandn = number of buyers in the marketq = quantity purchased by an average buyer

in one yearp = price of an average unit

Total Market Potential

Topic Example Video

The following video outlines how you can calculate market potential.


v=6CMkJQQxVWA

Activity: Book Buyers

Team-based exercise: Potential Book Buyer Market Estimate the number of book buyers in a year In groups of 3 – 4, estimate the number of people

you believe would buy books each year in Brisbane. Issues you might want to consider would include:

Total population less “non buyers” (suspect pool) Average number of books purchased per person Average price per book

Discuss the accuracy of this estimate and how you might verify your estimate with other methods

Time: 15 – 20 minutes.

Current Market Demand

There are three aspects of current market demand that should be estimated: total market demand area market demand actual sales and market share

Market Demand

The total volume for a specific product, purchased by a given market segment, from a defined geographical area where maximum output and set environmental conditions exist.

Market share

The proportion of the business’ sales compared with the total industry.

Usually expressed as a percentage.

Topic Example Video

The following video explains how to calculate market share.


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Forecasting Market Share

1. Calculate market demand 2. Determine number of competitors 3. Estimate market share

Industry averages method Pareto principle method

4. Set yearly market share targets.

Example: Coffee Shop

Using the Industry Averages Method to estimate market share:

1. Determine if there are any statistics specifically relating to coffee shops.

Australian Bureau of Statistics – Cafes and Restaurants (8655.0)

2. Review what statistics are provided.

Example: Coffee Shop Cafes and Restaurants: No. of businesses No. of persons employed Income Expenses Operating profit before tax Operating profit margin Periods: 1998-99 and 2003-04 Is there enough data provided to a market

share average? Can a forecast trend be calculated?


1998-99 2861/12845 (22.3%)

businesses $7174.3M x 22.3% =

$1599.9M income $1599.9M/2861 =

$559,200 per business PA

2003-04 3167/15083 (21%)

businesses $10129.6M x 21% =

$2126.9M incomes $2126.9M/3167 =

$671,600 per business PA

Specific business: Unlicensed café and restaurant

Pareto Principle Application

Using the Pareto Principle From ABS, all that is required are:

No. of Businesses Income

Pareto Principle Large: 80% revenue/20% businesses Medium: 15% revenue/30% businesses Small: 5% revenue/50% businesses

Example: Coffee Shop 1998-99 Large:

($7174.3M x .8) / (12845 x .2) = $2.24M per business

Medium: ($7174.3M x .15) /

(12645 x .3) = $283,700 per business

Small ($7174.3M x .05) /

(12845 x .5) = $55,900 per business

2003-04 Large:

($10129.6M x .8) / (15083 x .2) = $2.69M per business

Medium ($10129.6M x .15) /

(15083 x .3) = $335,600 per business

Small ($10129.6M x .05) /

(15083 x .5) = $67,200 per business


Conclusions: Growth market: $22,480 average growth per

year. Business Income Projection Large: $2.69M Medium: $335,600 Small: $67,200 Average: $671,600 What would be other factors that could

influence revenue projection? Floor space Location


So what does this all mean when it comes to making a forecast?

Use your judgement! The revenue projection for a small coffee shop

appears to be quite low. 5 years time: medium size business Revenue $335,600 PA Start up: $223,200 PA ($335,600 – $112,400) Average growth per year: $22,480

Competition

Competitors, whether they be direct or indirect, influence the perception and behaviour of the marketplace.

Competition Organisations face competition from three

main sources: Brand—from manufacturers of similar

products. Substitute products—dissimilar products

satisfying the same needs. Indirect—other firms trying to win

customers purchasing power.

Competitor Analysis

Competitor Analysis Direct Competitors Market Share Sales Strengths/Weaknesses Competitor Strategies

Competitor Analysis

Competitor Analysis This section focuses on what your competitors do well (strengths)

and what they do poorly (weaknesses) Direct Competitors These are the people who would compete “directly” against you

to the same target market segments for the same business with the same or similar products and services

Market Share This is the percentage of the market that your direct competitors

hold for a particular geographic location

Competitor Analysis

Sales In this section market share is converted into $value sales. It

can also be broken down into unit sales. With a broad range of products, it is feasible just to include product groups

Strengths/Weaknesses In this section competitors products/services are analysed in

terms of their relative advantages and disadvantages over your products and services. The purpose here is to determine if you can effectively compete against your competitors.

Competitor Analysis

Competitor Strategies In this section the strategies and tactics your

competitors would use as a response to you starting up your business and entering the marketplace is analysed

Here you would consider what impact your competitor strategies would have on your business and being able to compete effectively against them.

Competitive Analysis

Supply details of the major competitors. Who are the competitors in each segment? What are they likely to do in the future? Consider if any new competitors are likely to

enter the industry? Consider if any competitors are likely to leave

the industry?

Basic Competitive Strategies

Overall cost leadership Producing standardised product at a low

cost Differentiation

Market a USP (Unique Selling Proposition) Focus

Concentration on a small specialty market

Basic Competitive Strategies

Market leadership Looks to expand the market as the major player

Market Challenger Look to take over Market Leader position using

an aggressive strategy Market Follower

Copy the Market Leader without drawing undue attention

Market Niche Filling an overlooked gap or small specialty

market

Topic Example Video

The following video outlines what is market segmentation.


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What is market segmentation?

Segmentation is dividing the total market for the product into distinct homogeneous groups of buyers on the basis of different: needs, characteristics or behaviours who might require separate marketing mixes.

A market segment is a group of homogeneous consumers who will respond in a similar way to a given marketing mix.

Why segment the market?

Markets are usually segmented for the following reasons;

to focus on what the organisation can do best to cater for diverse needs, wants and buying

behaviours because one firm cannot satisfy everyone’s needs due to different strengths and competitive

advantages for better marketing opportunities to be more profitable.

Topic Example Video

The following video introduces the concept of segmentations as part of market analysis.

Take note of the key points. http://www.youtube.com/watch?v=llJNwdV-

G88

Market segmentation strategies

Basic segmentation strategies

Three alternative strategies for market segmentation; undifferentiated (mass) marketing concentrated segmentation (product variety

marketing) multiple segmentation (target marketing).

Topic Example Video

The following video provides a good case study example of market segmentation.


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Market segmentation options

Target Market Segments...

1. Measurability - size and purchasing power.

2. Accessibility - can be reached and served.

3. Responsiveness (Actionability) - effective programs can be designed to attract and serve the segment.

4. Substantiality - large and/or profitable.

Measurability

SubstantialityResponsiveness

Accessibility

Successfulsegmentatio

n

Effective Segmentation

Consumer market segmentation

Identify the variables for segmenting the consumer market.

Possible groupings of variables can be used; demographic geographic lifestyle (psychographic) behavioural occasion benefits usage loyalty.

Not all bases/criteria are relevant for all products.

Topic Recap Video

The following video recaps on the 4 Principles of Marketing which includes the market segmentation concept.


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Next Session Weekly Activity: ANZSIC Codes Visit the Australian Bureau of Statistics website

(www.abs.gov.au) and find out what are the 2 digit codes for each of the industry group categories

Also determine what are the additional digit codes for the particular industry

Using your business idea, match this with an industry code

Locate an ABS publication that lists these codes for you

If you have problems try searching under Catalogue number 1292.0

Report on your research (Word Count: 200 – 300).

session market research and analysis session outline strategic analysis industry analysis market...

Documents

dynamic environment

employment trends

risk analysis

lifestyle trends

population trends

risk action planan action

disposable income trends

global basis