Market AnalysisMarket Analysis

A Six-Step Approach to A Six-Step Approach to Understanding the Nature of Understanding the Nature of Competitive MarketsCompetitive Markets

Define the Relevant MarketDefine the Relevant Market Analyze Primary Demand for the Analyze Primary Demand for the

Relevant MarketRelevant Market Analyze Selective Demand for the Analyze Selective Demand for the

Relevant MarketRelevant Market Define Market SegmentsDefine Market Segments Assess the CompetitionAssess the Competition Identify Potential Target MarketsIdentify Potential Target Markets

Defining the Relevant Defining the Relevant MarketMarket

A set of products and/or services A set of products and/or services that management considers to be that management considers to be strategically important.strategically important.• For example, a brand of herbal tea For example, a brand of herbal tea

may have a large share of that may have a large share of that market but a very small share of the market but a very small share of the total tea markettotal tea market

Defining the Relevant Defining the Relevant MarketMarket

Describe the Structure of the Describe the Structure of the Relevant MarketRelevant Market Classify competing product market Classify competing product market

alternatives at three levels.alternatives at three levels.a . Competing brands within a product form. Competing brands within a product formb . Competing product forms within a . Competing product forms within a

product classproduct classc . Competing product classes within a . Competing product classes within a

generic needgeneric need

Defining the Relevant Defining the Relevant MarketMarket

Define the Boundaries Within the Define the Boundaries Within the Market.Market. Important for determining “Important for determining “Market Market

ShareShare””

Market Structure for Soft Market Structure for Soft DrinksDrinks

NoncolaCola

RegularRegular DietDiet

CaffeineCaffeine Caffeine CaffeineCaffeine

FreeCaffeine

FreeCaffeine

FreeCaffeine

Free

BRANDS

Defining the Relevant Defining the Relevant MarketMarket

Describe Product Market Structure•Identify potential competitors•Classify competitors in terms of similarity

Define Relevant Market Boundaries

Broad RelevantMarket Boundary

Narrow Relevant Market Boundary

Primary Demand Secondary Demand

Analyzing Primary and Secondary Analyzing Primary and Secondary DemandDemand

Define Relevant Market Boundaries

Primary Demand

•Identity of buyers of product form/class•Factors impacting willingness and ability to buy the product form/class

Selective Demand

•Type of buyer decision process•Identification of determinant attributes

Questions on Buyer Questions on Buyer IdentificationIdentification

Characteristics of Buyers or Characteristics of Buyers or UsersUsers

Can buyers of this product Can buyers of this product category be classified by location, category be classified by location, demographics, or lifestyle and demographics, or lifestyle and psychographic factors?psychographic factors?

If so, how?If so, how?

Questions on Buyer Questions on Buyer IdentificationIdentification

The Buying CentreThe Buying CentreWho is involved in the buying Who is involved in the buying

process: process: Reference groupsReference groups

ColleaguesColleagues

Family members?Family members?

Questions on Buyer Questions on Buyer IdentificationIdentification

Customer TurnoverCustomer TurnoverIs there a high degree of customer Is there a high degree of customer

turnover because of mobility or turnover because of mobility or because purchase is tied to age or because purchase is tied to age or other demographic factors?other demographic factors?

If so, why?If so, why?

Questions on Willingness and Questions on Willingness and Ability to BuyAbility to Buy

Willingness to BuyWillingness to Buy Would new or improved related products Would new or improved related products

and services increase utilization?and services increase utilization? What usage problems exist or are What usage problems exist or are

perceived to exist?perceived to exist? Is the product or service compatible with Is the product or service compatible with

the values and experiences of the buyer?the values and experiences of the buyer? What types of perceived risks are What types of perceived risks are

significant in the purchase of the product significant in the purchase of the product form?form?

Questions on Willingness Questions on Willingness and Ability to Buyand Ability to Buy

Ability to BuyAbility to Buy To what extent do purchase prices To what extent do purchase prices

and other acquisition and and other acquisition and maintenance costs inhibit purchase?maintenance costs inhibit purchase?

Are product size or space problems Are product size or space problems creating problems for customers?creating problems for customers?

Is the product available at a time and Is the product available at a time and place that meets customer needs?place that meets customer needs?

Market Structure for Holiday Market Structure for Holiday TravelTravel

G reyh ou n d G ray G oose

B u s

V ia

R a il

A vis H ertz B u d g e t

R en t P erson a l

A u tom ob ile

C an ad ian A ir C an ad a N orth w es t

A ir

N eed fo r H o lid ay Tran sp orta tion

Questions on Selective Questions on Selective DemandDemand

Decision ProcessesDecision Processes How extensive is the search for How extensive is the search for

information?information? Do buyers use personal or Do buyers use personal or

impersonal sources of information?impersonal sources of information? Do buyers seek information about Do buyers seek information about

brand or supplier characteristics?brand or supplier characteristics?

Sequential Process of Consumer Sequential Process of Consumer ChoiceChoice

Total Brand Total Brand SetSet

TideTide

TrendTrend

CheerCheer

GainGain

SurfSurf

RinsoRinso

BoldBold

OxydolOxydol

WiskWisk

PurexPurex

UltraUltra

FabFab

Awareness Awareness SetSet

TideTide

CheerCheer

BoldBold

WiskWisk

FabFab

Consideration Consideration SetSetTide Tide

CheerCheer

FabFab

Types of Decision Types of Decision ProcessesProcesses

Consumers Organizations

Extensive ProblemSolving

Limited ProblemSolving

Routinized Response

COMPLEX

SIMPLE

New Task

Modified Rebuy

Straight Rebuy

Questions on Selective Questions on Selective DemandDemand

Determinant CharacteristicsDeterminant Characteristics What are the benefits buyers hope to obtain What are the benefits buyers hope to obtain

from usage or ownership of the product?from usage or ownership of the product? What product attributes or characteriatics What product attributes or characteriatics

are viewed as providing these benefits?are viewed as providing these benefits? What is the relative importance of the What is the relative importance of the

various benefits desired?various benefits desired? How much variation is perceived among the How much variation is perceived among the

alternatives on each of the important alternatives on each of the important attributes?attributes?

Attributes of Fast Food Attributes of Fast Food RestaurantsRestaurants

ATTRIBUTE IMPORTANCE

Food Taste 4.30

Quality and Cost 3.79

Food selection 3.58

Menu Alternatives 3.58

1 = unimportant

5 = very important

Attribute Ratings for Three Attribute Ratings for Three RestaurantsRestaurants

ATTRIBUTE A B CFood Taste 4 3 4Quality and Cost 3 5 4Food Selection 3 5 3Menu Alternatives 3 4 3

1 = Poor5 = Excellent

Assessing Whether an Attribute Assessing Whether an Attribute is is DeterminantDeterminant

IrrelevantAttribute

OptionalAttribute

DefensiveAttribute

DeterminantAttribute

IrrelevantAttribute

Optional Attribute

Defensive

Attribute

Determinant

Attribute

Low High

Low

High

Perceived Variation Among Alternatives

Perceived

Importance