Marketing course at Copenhagen Business School

1. 1
Marketing strategy and planning
A framework for strategic marketing and planning
-
The firm and its environment –
Customer and competitor analysis
Week 37
Jacob Holm
Jacob.k.holm@gmail.com
Tlf: 24 42 11 32
www.office2go.dk
www.Office2go.dk

2. 2
Hold roderi……..
Hold A Hold B Hold C
Tirsdag 15.20 – 17.10 Torsdag 8.00 – 9.40 Tirsdag 8.00 – 9.40
D1V089 SP216 D1V001
www.Office2go.dk

3. 3
The marketing management process
Part 1:Marketing Strategy
• Market –led strategic management – chapter 1
• Strategig marketing plannng
Part 2: Competitive market analysis
• The changing market environment – chapter 3
• Customer analysis – chapter 4
• Competitor analysis - chapter5
• Understanding the organizational resource base – chapter 6
• Forecasting future demand and market requirements – chapter 7
Part 3: Identifying current and future competitive positions
• Segmentation and positioning principles – chapter 8
• Segmentation and positioning research – chapter 9
• Selecting target markets– chapter 10
Part 4: Competitive position strategies
• Segmentation and positioning principles – chapter 11
• Competing through the new marketing mix – chapter 12
•Competing trough innovation– chapter 13
• Competing through superior service and customer relationship – chapter 14
Part 5: Implementing the strategy
• Strategic customer management – chapter 15
• Strategic alliances and network – chapter 16
• CSR – chapter 18 www.Office2go.dk

4. 4
MARKOPS GRUPPER – Deadline mandag 24 sept
Sendes til jacob.k.holm@gmail.com
Product portfolio strategy, to decide which new projects proposed by R&D will
be fully developed and brought to market
Segmentation and positioning strategies to determine which market segments
will be targeted, and how products will be positioned
Marketing mix strategy to set day-to-day operational marketing decisions
such as pricing, production, communication and distribution
www.Office2go.dk

5. 5
Today’s subject
Marketing Audit:
1. Macro environment forces – Political/legal, economic/demographic
social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes,
suppliers, distributors and suppliers – Porters five forces
3. Against whom are we competing and what market are we in –
Porters value chain and value curves
4. Consumer analysis
www.Office2go.dk

6. 6
A bit inspiration before we start
The firm and its environment
www.Office2go.dk

7. 7
The organizations environment
1. Macro environment forces – Political/legal, economic/demographic
social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes,
suppliers, distributors and suppliers – Porters five forces
www.Office2go.dk

8. 8
1. Macroenvironment
• What is the macroenvironment
– Demographic, Socio cultural, Physical, Political/Legal, Economic and
Technological.
“like mosquitoes or cooling breezes on a humid summer evening,
trends will always be present, whether marketing managers like them or
not. The question is what managers can do about them”. -
- Mullins, Walker, Boyd, Larréche (fifth edition -page 68)
• Do we have any influence on these trends?
– Depends on the size and willingness to use the power.
– Global multinational companies like Coca-cola, GM, Microsoft, Nestlé have great
influence.
– Medium sized global or local companies like Zara, H&M, GAP in the fashion can
have some influence.
– Small local firms have typically no influence alone but will work through interest
organizations by lobbying.
www.Office2go.dk

9. 9
Demographic environment
• World perspective:
– How is the demographic development in Europe, Asia, Africa, North and South
America.
• Regional perspective:
– Ex. EU north contra south – new countries in the EU.
• National perspective:
– Rural -> urban development
• Local perspectives:
– Perspectives in the local communities
• Age – individual economic status – economic development,
geographical placement and identity etc.
www.Office2go.dk

10. 10
Demographic environment
Hvordan udvikler markedet sig.
• Det grå guld
• Kvinder over 40
• Middelklassen
• Multietnisk samfund
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11. 11
Sociocultural environment
The sociocultural environment represents the values, attributes, and the
general behavior of the individuals in a given society.
• Shift or development/transformation in the structure of the society.
– Generation X – The rise of the creative class – individual values
– Family structure
– Immigration
• Higher educated, postponing marriage,
delaying having children.
• Different from country to country
– Denmark is a homogeneous country – it’s hard to immigrate to
– US is a multicultural country where it’s easier to get integrated
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12. 12
Economic environment
• The economic performance of a country is measured by Gross
domestic product (GDP)
– GDP is defined as the total value of final goods and services produced
within a territory during a specified period (or, if not specified, annually, so
that "the UK GDP" is the UK's annual product). GDP differs from gross
national product (GNP) in excluding inter-country income transfers, in effect
attributing to a territory the product generated within it rather than the
incomes received in it.
– GDP = consumption + investment + exports − imports
– Economists (since Keynes) have preferred to split the general consumption
term into two parts; private consumption, and public sector spending =>
GDP = private consumption + government + investment + net exports
– To compare countries we measure it normally on per-capita basis.
– The problem is that we don’t measure the purchasing power – only the
countries productivity !
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13. 13
Economic environment
• Big Mac index
– In the Big Mac index, the "basket" in
question is considered to be a single
Big Mac as sold by the McDonald's
fast food restaurant chain.
– The Big Mac index was introduced by
The Economist newspaper in
September 1986 and has been
published by that paper more or less
annually since then. The index also
gave rise to the word Burgernomics.
• Tall Latte index
– In January 2004, The Economist
introduced a sister Tall Latte index.
The idea is the same, except that the
Big Mac is replaced by a cup of
Starbucks coffee, acknowledging the
global spread of that chain in recent
years
www.Office2go.dk

14. 14
Economic environment
• Factors that are important for the economic environment
– Interest rate
– Net income level (after taxes)
– Unemployment level
– Future economic forecast – national and international
• Example - Demand in Denmark
– Interest rates low – mortgage interest is app. 0,3 %
– Housing prices are high (Copenhagen area)
– Unemployment low
– Net income are rising after tax cuts by the government
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15. 15
Political/legal environment
• In every country there is a legislative or regulatory environment
within firms must operate.
• Political risks of confiscation, expropriation or domestication.
• Risks of: Import/export restrictions – Taxations - Price control
• Copyright og protection of intellectual property
• Government regulations – Typically on price product, promotion and
distribution – EU favors multinational companies compared to small local
companies
• Government deregulation – telecommunication, air travel etc.
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16. 16
Technological environment
• What is the technological level in the country, region etc.
• "I think there is a world market for maybe five computers”
-- Thomas John Watson, Sr. (1874-1956), American
businessman, president of IBM
• Skype found a new way of phoning – the company was sold to
eBay for approximately $2.6 billion
www.Office2go.dk

17. 17
Globalisering
• Globalisering – det er her og bliver ”værre” eller ”bedre og bedre”
• Ikke mere lavtløns job der udflyttes nu også højtløns jobs.
• Dem som kan udnytte mulighederne er verden ”lille”
”At the same time as markets are becomming more global, so the
destinct of market segments is becomming clearer. The most
succesful firms are those that have recognised this incraesing
importance of segmentation and positioned their companies so as
to take best advantage of it” - side 64
• Verden bliver mere og mere uforudsigelig
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18. 18
The organizations environment
1. Macro environment forces – Political/legal, economic/demographic
social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes,
distributors and suppliers – Porters five forces -
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19. 19
Competition can be tough
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20. 20
Competitor analysis
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21. 21
2. Micro environment
Porters five forces
Market definition
Industry
competitors
Determine
intensity &
attractiveness?
Suppliers
Power etc.
Buyers
Power etc.
New entries
Threats & attractiveness, competence
Substitutes
Relative price,
switching cost etc.
What determine
attractiveness (high profit)?
= Barriers
www.Office2go.dk

22. 22
Markets and industry definition
What is the relevant market………….
The relevant market definition depends on what you want to investigate
– and you often need to see the market from different perspectives.
Generic
categories
Product class Product group
Transportation Cars, trains,
busses, caps etc
Cars SUV
Communication Mobile phone,
Ord. phone,
Email, Fax
Mobile phones 2G phones
Pictures Painting, photo,
decoration
Photo Digital photo
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23. 23
Rivals Consumer
Supply
Sub.
New
entries
Understanding market positioning
Where are the barriers ?
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24. 24
Exit barriers
Entry
barriers
Low High
Low
High
Low stable
returns
Service industry
Low, risky
returns
Polluting industries
High stable
returns
Shipping
High, risky
returns
IT, Medico, software
Understanding barriers
Market conditions
Trend = breaking barriers (ie ”indre marked &
globalisation”)
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25. 25
Exit barriers
Entry
barriers
Low High
Low
High
Understanding barriers
Market conditions
Entry barriers:
High capital requirements, economies of scale, patents,
licensing requirements, scarce location, raw materials,
distributors,
Exit barriers:
Legal or moral obligations to customers, creditors and
employees, government restrictions, low asset salvages
value due to overspecialization or obsolescence, high
vertical integration and emotional barriers.
www.Office2go.dk

26. 26
Competitive forces
Bargaining power
of suppliers
Threat of new
entrants
Rivalry among
existing firms
Bargaining power
of buyers
Threat of
substitute prod.
Rivalry is greater when:
• There is high investment intensity. -
Ex. Airlines
• Many small firms exist, no dominant
firm – ex restaurants
• There is little perceived prod.
Differentiation – ex car tires
• It is easy for customers to change
suppliers – ex phone companies
www.Office2go.dk

27. 27
Competitive forces
Bargaining power
of suppliers
Threat of new
entrants
Rivalry among
existing firms
Bargaining power
of buyers
Threat of
substitute prod.
Entry is more difficult when:
• Strong economies of scale are
present. – Ex. Shipping
• High capital requirements – ex 3G
mobile technology
• When product differentiation exists –
ex Cirque-Du-Soleil
• When it is difficult gaining distribution
– ex Paint market
How strong are the barriers
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28. 28
Competitive forces
Bargaining power
of suppliers
Threat of new
entrants
Rivalry among
existing firms
Bargaining power
of buyers
Threat of
substitute prod.
Threat of substitute prod are higher
when:
• Alternative products perform the same
function.
• New inventions can be produced
cheaper and solve the buyers need.
How strong are the barriers
www.Office2go.dk

29. 29
Competitive forces
Bargaining power
of suppliers
Threat of new
entrants
Rivalry among
existing firms
Bargaining power
of buyers
Threat of
substitute prod.
The effect is normally seen through
prices – high supplier power is seen
when:
• Limited number of suppliers
• High switching cost
• Realistic threat of forward integration
• Suppliers product is a large part of
buyer’s production.
• There is a high cost in changing
suppliers – ex microsoft
Who has the bargaining power ?
www.Office2go.dk

30. 30
Competitive forces
Bargaining power
of suppliers
Threat of new
entrants
Rivalry among
existing firms
Bargaining power
of buyers
Threat of
substitute prod.
Bargaining power is increased when:
• The extent of buyer concentration. –
Ex. Wall-mart
• Low switching cost – ex TDC ><
Telmore
• Threat of backward integration
• The product is of low importants to the
buyer
• Buyers profitability is low – will create
a more aggressive bargaining.
Who has the bargaining power ?
www.Office2go.dk

31. 31
Porters five forces
Market definition
Industry
competitors
Determine
intensisity &
attractiveness?
Suppliers
Power etc.
Buyers
Power etc.
New entries
Threats & attractiveness, competence
Substitutes
Relative price,
switching cost etc.
PEST
www.Office2go.dk

32. 32
Competitor analysis
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33. 33
Porters værdikæde
• Hvorfor værdikæde analyse?
– Hvor skaber vi værdi – supply, production, customers
– Hvor skaber konkurrenterne værdi
– Hvor skal vi sætte ind
– Hvordan måler vi styrker - værdikurver
Hvor skabes værdien www.Office2go.dk

34. 34
Eks: Møbelbranchen
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35. 35
0
1
2
3
4
5
6
7
8
9
10
Price Speed Frills Numbered
seats
Tickets Hub strategy
Customer needs
easyJet
BA
Ex: easyJet
Competitor analysis
High
low
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36. 36
How long does products live ?
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37. 37
Product life cycle - PLC
Market introduction stage:
•cost high sales volume low
•losses
•high prices – skimming or penetration
•Innovators
Growth stage:
•costs reduced due to economies of
scale - sales volume increases
significantly
•profitability
•prices to maximize market share
•Early adaptors and majority
Mature stage:
•costs are very low sales volume peaks
•prices tend to drop due to the
proliferation of competing products - very
profitable
•Late majority – innovators are gone
Decline stage:
•sales decline
•prices drop (lower prices may lead to
lower value perception)
•profits decline
Pre-
relationship
stage
The early
stage
The
Development
stage
The long-
term
stage
The final
stage
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38. 38
The early stage
• Create awareness of the product / Brand
• Trial with low commitment
• Create a basic trust – all sales is based on trust!
www.Office2go.dk

39. 39
Product life cycle - PLC
Market introduction stage:
•cost high sales volume low
•losses
•high prices – skimming or penetration
•Innovators
Growth stage:
•costs reduced due to economies of
scale - sales volume increases
significantly
•profitability
•prices to maximize market share
•Early adaptors and majority
Mature stage:
•costs are very low sales volume peaks
•prices tend to drop due to the
proliferation of competing products - very
profitable
•Late majority – innovators are gone
Decline stage:
•sales decline
•prices drop (lower prices may lead to
lower value perception)
•profits decline
Pre-
relationship
stage
The early
stage
The
Development
stage
The long-
term
stage
The final
stage
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40. 40
The development stage
• Increase marketing cost
• Sign first order
• You know need to prove your worth and build on the initial trust
– Service
– Delivery on time
– Accurate invoice
– Follow up on mistakes or delays
– After sales service
www.Office2go.dk

41. 41
Product life cycle - PLC
Market introduction stage:
•cost high sales volume low
•losses
•high prices – skimming or penetration
•Innovators
Growth stage:
•costs reduced due to economies of
scale - sales volume increases
significantly
•profitability
•prices to maximize market share
•Early adaptors and majority
Mature stage:
•costs are very low sales volume peaks
•prices tend to drop due to the
proliferation of competing products - very
profitable
•Late majority – innovators are gone
Decline stage:
•sales decline
•prices drop (lower prices may lead to
lower value perception)
•profits decline
Pre-
relationship
stage
The early
stage
The
Development
stage
The long-
term
stage
The final
stage
www.Office2go.dk

42. 42
The long-term stage
• Maintenance marketing cost
• Creating a sort of “friendship” – anniversary or birthday present.
• Efficiency improvement in sales and marketing. Reduced cost.
• Orders over the phone or EDI
• Maximum commitment – tough for competitors to steal your
customer, even if you price is higher!
• CRM (Customer relationship management) systems
• Database marketing through a club
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43. 43
Ex: Customer clubs
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44. 44
Product life cycle - PLC
Market introduction stage:
•cost high sales volume low
•losses
•high prices – skimming or penetration
•Innovators
Growth stage:
•costs reduced due to economies of
scale - sales volume increases
significantly
•profitability
•prices to maximize market share
•Early adaptors and majority
Mature stage:
•costs are very low sales volume peaks
•prices tend to drop due to the
proliferation of competing products - very
profitable
•Late majority – innovators are gone
Decline stage:
•sales decline
•prices drop (lower prices may lead to
lower value perception)
•profits decline
Pre-
relationship
stage
The early
stage
The
Development
stage
The long-
term
stage
The final
stage
www.Office2go.dk

45. 45
The final stage
• Total commitment from seller and buyer.
• No doubt about the advantage of dealing with each other
• Invite to football matches, golf, vacations ect.
But problems are coming!
• New developments are outmatching our product
• Customers begin to disloyal
• If we don’t react it could have a long term effect.
•Cipramil (Lundbeck)
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46. 46
PLC – Product Life Cycle
Mange forskellige forløb – Kan være produktgrupper
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47. 47
The Boston Matrix
Question mark
?
Stars
Dogs Cash Cows
Market Growth
Market Share
High
Low High
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48. 48
PLC + BCG
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49. 49
Coffee break
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50. 50
Customers – who are they………..
And what can we learn from them…………………………
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51. 51
How do the customer act
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52. 52
Buying process
Problem identification
Information search
Routine or habitual
purchase
Evaluation of
alternatives.
Purchase
Post purchase eval.
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53. 53
Decision making process
High Low
Extended
(Info search,
consideration of
alternatives)
Complex decision making
(Cars, homes, vacations)
Limited decision making,
incl. Varity seeking making
and impulse purchase
Habit/routine
(Little or no info search)
Brand loyalty
(Athletic shoes, milk,
deodorant)
Inertia
(frozen vegetables, Paper
towels)
Extent of involvement
Extent
of
analysis
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54. 54
The evaluation process
Where can marketers influence the buying process
Problem identification
Information search
Routine or habitual
purchase
Evaluation of alternat.
Purchase
Post purchase eval.
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55. 55
Why are these areas of special interest to
marketers
Problem identification
Information search
Routine or habitual
purchase
Evaluation of alternat.
Purchase
Post purchase eval.
• Hard facts
– Product
– Price
– Quality
– Size
– Technique
• Soft facts
– Attitudes
– Lifestyle
– Brand attitudes
– Social acceptability
– Salespersons involvement
– Storytelling
– Customer orientation
Market
research
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56. 56
Customer Journeys
holm lund sørensen
”Customer Journeys”
Eksempel:
Entre: 2 min – 55 kr
Forl. 1: 10 min – 0 kr
Forl. 2: 20 min – 25 kr
Rest 1: 20 min – 25 kr
Rest 2: 0 min – 0 kr
Andet: 20 min – 25 kr
Kult 1: 10 min - 25 kr
82 min – 155 kr
Entre: 2 min - 55 kr
Forl 1: 20 min - 25 kr
Forl 2: 15 min - 25 kr
Rest 1: 0 min - 0 kr
Rest 2: 15 min - 50 kr
Andet: 10 min - 25 kr
Kult 1: 10 min - 25 kr
72 min - 205 kr
Stimuler merforbrug de rigtige steder!
• Storytelling
• Watching customers
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57. 57
Listening – not evaluating
• Storytelling
• Watching customers
• Meeting the customer
• Customer days
• Listening not evaluating:
Story from a leading computer company – IBM?
1. The lady that could not get the computer ”foot-pedal” to work and had to be told
that the computer was not a sewing machine and to take the mouse of the floor.
2. People who phone and complained that their software says ”press any key”, but
the keyboard has no key marked ”any key”, so there must something wrong with
the keyboard.
The answer from the service people: ”read the ”flaming” manual........
No wounder that DELL and Apple has succes.........
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58. 58
Complainers
Storytelling
Watching customers
Meeting the customer
Customer days
Listening not evaluating:
What about complainers
• Because we do not receive any customer
complaint it dos not mean that all is well - do
not confuse silent complainers with satisfied
customers.
• Most dissatisfied customers do not complain
to us – probably only 4-5 % bother
• Dissatisfied customers tell everyone but us
• Dissatisfied customers buy less
• Typically the cost of complaint resolution is
10-25 % of the cost of finding a new
customer.
• Resolved complaint tends to become more
loyal customers.
www.Office2go.dk

59. 59
Today’s subject
Marketing Audit:
1. Macro environment forces – Political/legal, economic/demographic
social/cultural, technological - PEST
2. Micro environment actors – Customers, competitors, substitutes,
suppliers, distributors and suppliers – Porters five forces
3. Against whom are we competing and what market are we in –
Porters value chain and value curves
4. Consumer analysis
www.Office2go.dk

60. 60
Jacob Holm
Tlf: 24 42 11 32
Email:jacob.k.holm@gmail.dk
www.office2go.dk
Nothing more for today