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Tracking Competitors

Strategies

Industrial Products

Product sales literature

The companys own sales forceTrade advertising

Consumer Products

Tracking Ads

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Comparing Value Chains

Firms Infrastructure

Inbound

Logistics

Human Resources Management

Technology Development

Procurement

Operations Outbound

Logistics

Marketing

And Sales

Service

Support

Activities

Primary

Activities

M

AR

G

I

N

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Product Entry Decisions

Decision R&D Marketing Timing

First State-of-the- Stimulating Early-entry

To Market art Primary Demand in the PLC

Second Advanced, Differentiating Entry Early inTo Market Responsive the Product PLC Growth

Next Ability in Market Entry During

to Market Applications Segmentation PLC Growth

Late Skill in Process Minimizing Selling Entry Late in

To Market Development and Distribution PLCGrowth Cost

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Competitive Product Analysis

Matrix

Marketing Competitor A Competitor B

Mix Brand A Brand B

Product 1 Product 2

1. Product

Targeted Segment

2. Price

3. Promotion

Advertising4. Place

5. Technology Strategy

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Differential Advantage Analysis

Capabilities Matrix

Ability To Firm/Product Own

A B C Product

Conceive/Design

Produce

Market

Finance

Manage

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Differential Advantage Analysis

Success Matrix

Critical Success Firm/Product Own

Factors A B C Product

12

3

4

5

Overall Rating

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Assessing A Competitors

Will

A strong competitor can be overcome

A weak competitor can cause damage

Assess:

How crucial is this product to the firm?

How visible is the commitment to themarket?

How aggressive are the managers?

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Predicting Future Strategies

Competitor signals with an announcement

Use historical information to forecast:

Competitors Strategy dependent

variableCapabilities and Resource independent

variable

Extrapolate that the trend may continueLink Capabilities/Resources with Strategy

Simulate by Role-Play

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3. Customer Analysis

What we need to know about current and potentialcustomers:

1. Who buys and uses the product?

2. What customers buy and how they use it?

3. Where customers buy?4. When customers buy?

5. How customers choose?

6. Why customers prefer a product?

7. How customers respond to marketingprograms?

8. Will customers buy it (again)?

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Segmentation Variables for

Consumer Markets

1. Who buys and uses the product?

Demographics

Age, gender, geographic location

Socio-graphicsIncome, education, occupation, social

class

Personality

traits ambitious, extrovert Psychographics and Value

lifestyle activities, interests, opinions

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Lifestyle Topology

Who buys and uses it?

Strivers

Achievers Pressured

Adapters

Traditionalists

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Value Topology

Who buys and uses it? Self-respect Security

Warm relationship with others Sense of accomplishment Self-fulfillment Sense of belonging

Respect for others Fun and enjoyment Excitement

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Segmentation Variables for

Business Markets

Who buys and uses it? Demographics

Industry, company size, location Operating Variables

Customer technology, use status, service Purchasing Approaches

Structure, power, purchasing criteria Situational Factors

Size of order, just-in-time delivery Personal Characteristics

Attitude to risk, loyalty to supplier

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Benefits

2. What customers buy and use?

The Firm Produces Features

The Customer Purchases Benefits Technology Firms User friendly

Drill Manufacturer Sells holes, not drills

Product Manager Understand thebenefits customers are seeking in the

market segment

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Purchase Pattern

What customers buy and use ? Database Marketers use three criteria for

evaluating and segmenting customers in theirdatabases

Recency how recently has the customerbought brand?Frequency How many different productsdoes the customer buy, and what are thetime intervals?Monetary Value What is the value of thecustomers purchases in terms of profits?

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Potential Customers

What customers buy and use ?

Continuum Relating to the Product

UnawareAware

Accepting Willing to use the product

Attracted Positive towards theproduct

Active Buy and/or plan to buy

Advocates - Encourage others to buy

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Product Assortment

What customers buy and use ?

Different Brands Purchased by the

Customers for the category in the

Segments

Create Switching Tables

Different Vendors used by BusinessesIndustrial products

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Use

What customers buy and use?

Sweets Festivals

Rainwear Rainy season Sunscreen Summer

Customer Suggestions Baking soda to

deodorize drains Lime juice to clean

cooking range

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Channels of Distribution

3. Where customers buy?

Customers Migrate to Other Channels

Specialty retailer to DiscountDiscount to Department Store

Neighborhood to Superstore

Small Retailer to Large-Volume retailerBrick-and-Mortar to Internet

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Timing Issue

4. When customers buy?

Sales or Price Breaks and Rebates

Fast-Food Breakfast, lunch, snack,dinner

Woolens Winter

Capital Equipment Near fiscal year end Cold Remedies Before and during winter

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Customers Compare

Alternatives

5. How customers choose? Information

Media AdvertisementsIn-store personnelWord-of-MouthInternet

Decision ProcessEmotionalImpulseRational

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Multi-attribute Model

How customers choose?

The process of how customers make

decisions

Attributes used by customer to define

the product

Perceptions amount of attributes

possessed by each brand or productin the category

Importance Weights weights given by

customer for each attribute

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Attributes

How customers choose?

Identifying the relevant set is not easy

Managerial judgment alone can cause

misestimates

Collect information:

Focus-Groups

Survey/Questionnaire Open-ended or

close-ended

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Perceptual or Positioning

Map Bank

Courteous Personnel

F A

DInconvenient

Convenient

C B ATMLocations

Un-courteous

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Importance Weights

Direct Questioning

On a scale of 1-to-7 with 7 being very

important and 1 not important, how

important is the attribute .. in your

purchase decision

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Decision Making by Manager

for Each Brand

Segment 1 Segment2

Attribute A Weight x Rating =Score

Attribute B

Attribute C

Attribute D

Segment Score

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Rules Available to the Product

Manager

Compensatory Rule Multivariate Model

All attributes are considered and

weakness in one can be compensated for

by strength in another

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Lexicographic Rule

Compares the products on the most

important attributes alone and eliminates

those which are not at the top

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Conjunctive Rule

Assumes the customer sets minimum

cutoffs on each dimension and rejects a

product if it has any attributes below the

cutoff

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Conjoint Analysis

An alternative to weights, conjoint analysis

permits the product manager to infer the

importance of different product attributes

in terms of importance

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Conjoint Analysis

Laptops Computers

Three Attributes

Weight 1 kg or 2 kg

Battery Life 2 hr or 4 hrBrand HP or LG

Task:

Rank in order the followingcombinations from 1 = most preferred to 8

= least preferred

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Customer Response

Laptop ComputersCombination Rank

1 kg, 2 hr, HP 4

1 kg, 2 hr, LG 2

1 kg, 4 hr, HP 3

1 kg, 4 hr, LG 1

2 kg, 2 hr, HP 8

2 kg, 2 hr, LG 6

2 kg, 4 hr, HP 7

2 kg, 4 hr, LG 5

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Analysis

Laptop Computers Preference

1 kg, 4 hr, LG with rank 1 most

2 kg, 2 hr, HP with rank 8 least

Average Ranking:

1 kg option = 2.5 = (1 + 2 + 3 + 4)/4

2 kg option = 6.5 = (5 + 6 + 7 + 8)/4

2 hr option = 5.0

4 hr option = 4.0

HP = 5.5

LG = 3.5

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Difference in the Average Ranks:

Weight = 4.0 (6.5 2.5)

Battery Life = 1.0 (5 4)Brand = 2.0 = (5.5 3.5)

The most important attributes to this

customer is weight, followed by brand, andthen battery life

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Customer as Problem

Solver

Extensive Problem Solving First-time

buyers or high-technology products

Limited Problem Solving Customer

understands functioning and competitors,

evaluates on small number of attributes

Routine Response Behavior routine

purchases with low or high price tag

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Customer Value

6. Why customers prefer a product?

Critical Component of Customer Analysis

BenefitCustomers perspectiveCost price, maintenance

Sources of Customer Value

EconomicFunctional

Psychological

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Manifestation of Customer

Value

Pricefirms assessment of the products

value

Price Sensitivity sales change with price

Satisfaction Indicated in surveys used as

standard practice

Complaints and Compliments Number

Word-of-Mouth Difficult to track

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Margin/Profit Contribution Higher

margins

Sales Value assessed by the market

Competitive Activity New-product

introductions

Repeat Purchase Rate High loyalty

indicates high brand value

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Assessing Value of the

Product Category

Determine the uses of the product

Estimate the importance of the uses

List competing products for the uses Determine the relative effectiveness of the

product category in each usage situation

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Assessing the Value of he

Brand/Product/Service

Assessing the total value of a brand can

be done indirectly

A high-value brand has:

High Market Share

High Repeat Purchase Rate

Low Elasticity with respect to PriceLimited Competitive Brand Shopping

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Using customer responses to estimate the

value of a brand directly:

Ratings for competing products

Constant sum ratings across brands

Graded paired comparisons

Conjoint analysis

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Customer Response

7. How customers respond to marketing programs

Sensitivity and Preference Varies by Customer:

To Price and to means of payment

Distribution and Availability including the

effect of

direct marketing

AdvertisingPromotion

Service

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Assessing Sensitivity

Expert Judgment using knowledge ofmanagers, sales-force

Customer Survey including both direct

questioning and more subtle approachesas conjoint analysis

Experiments both controlled settings and

actual market segments Analyses of Past Data across marketsegments or individual customer records

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Decision to Purchase

8. Why customers buy it again?

Critical Issue whether new or current

customer will purchase the product in the

future

Quality Program satisfy and retain

customers

Relationship Marketing long-term,

lifetime, value of a customer

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Quality - Satisfaction

Quality is ultimately measure in terms ofcustomer satisfaction

Satisfaction has a strong relative component

to qualityAre customers of the product category

more or less satisfied than those of adifferent but potentially substitutable one?

Are customers of the companys productmore or less satisfied than customers of acompetitors?

M t f

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Measurement of

Satisfaction

Three Key Aspects

Expectations of Performance/Quality

Perceived Performance/Quality

The Gap between Expectations and

Performance

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Indirect Measures

Word-of-Mouth Comments

Complaints

Compliments

Repeat purchase or lack thereof

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Why Satisfaction?

Leads to Loyalty

Customer Retention

Intention to Purchase

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Satisfied but No Repurchase

Due to Poor Product Supply

Variety Seeking or Multiple Sourcing

Large Promotional Deals

Unsatisfied but Continue to Purchase

MonopolyConvenience

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Segmentation

Each Customer is Unique

Mass Marketing is Generic

Each Customer Strategy

Time-Consuming

Not Very Profitable

Group Customers into Segments A Compromise

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Insights into Different Kinds of Customer

Behavior

Makes Marketing Programs more Efficient

With IT one-to-one Marketing is Viable

But Segmentation is the Norm

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Criteria for Segmentation

Sizeable

Identifiable

Reachable

Respond Differently

Coherent

Stable

M th d f M k t

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Methods for Market

Segmentation

Simple to Apply, Easy-to-Use software,

and require Descriptive and Behavioral

Data

Cluster Analysis

Tabular Analysis

Regression Analysis

Latent Class Analysis

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Cluster Analysis

Examines the values of the variables for

each respondent , from a sample of

customers, and then groups the

respondents with similar valuesPurchase

Quantity

Age

A

B

C

Cluster

Cluster

Cluster

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Phone company employed Cluster Analysisto understand its regional customers

Six segments based on clustering

householdsLow Income/Blue Collar Fledglings

Frugal/Retired Thrifties

Contended Middle Class Contenteds

Aspiring M-C Status Seekers Climbers

TechnologyDriven Strivers Techies

Contended Upper Middle-Class -

Executives

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Industrial-products company segmented itsnational accounts based on trade-offs betweenprice and service to form four segments

Programmed Buyers small customer, routine

purchasesRelationship Buyers small buyers, loyal, pay lowprices and obtain high service levels

Transaction Buyers large buyers, obtain pricediscounts, expect high service levels, switchsuppliersBargain Hunters large buyers, lowest prices,highest service levels

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Tabular Analysis

This analysis uses categorical variablesbased on customer responses

Descriptor Variables related to attitude,

independent variablesConvenience Oriented

Enthusiastic

Disinterested

Behavioral Variables dependent variables

Small/Light, Medium, Large/Heavy

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Regression Analysis

Is used when the product manager can

specify an explicit relationship between

behavioral, dependent variable, and one

or more descriptor, independent variable However, unlike tabular analysis it

assumes a continuously measured

dependent variable, quantity rather thancategory of usage

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Usage = f (price, convenience oriented,

enthusiastic, disinterested, low, medium,

high income)

Regression performed using regressioncoefficients to represent the regression

model in an equation form

U = aP + bC + cE + eD + fL + gM + hH

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Results may suggest:

Price sensitivity depends on various

service characteristics quality, support

Price responsiveness exists across

counties and continents segmentation

based n responsiveness rather than

country boundaries are useful for globalmarketing

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Latent Class Segmentation

Begins with the market as a whole and

then determines what segmentation

pattern best trades off few segments and

the ability to explain behavior The previous methods begin with

individuals and then aggregate them

Is recent, intriguing, requires sophistication not widely used

Judgment Based

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Judgment-Based

Segmentation

Useful because segments are readily

identifiable and reachable

Heavy, Light, Non-Users

Can be used as a basis for comparison

with results of computer-based analysis

Segments based on intuition may exist

only in the mind of a manager and not in

the market