4. Developing Market Opportunities and Strategies
Marketing Managers
Analysis Planning Implementation Organisation Control
Developing Needed Information
Assessing Distribution
Internal Information
Information Information
Databases Analysis
Needs
Market Marketing
Intelligence Research
Marketing Environment
Target Markets Marketing Channels Competitors Publics Macro environment forces
5. Market Targeting Market Positioning
Market Segmentation
Develop Measure of Develop positioning
Identify bases for segment attractiveness for market segments
segmenting the market
Select target segment Develop a marketing mix
Develop segment Profiles
for each segment
Major Segment Variables for Consumer Markets
Existing Product Sales, MarketVariables
Geographic share, Growth and Decline,
RelativeRegion and/or countryetc.
World market sizes,
City and/or region
Density
Climate
Demographic
Age, gender, family size, family life cycle, income, occupations, education, religion, race, generation, nationality
Psychographic
Social class, lifestyle, personality
Behavioural
Types of occasions and festivals, existing market cultures, user status, loyalty status,
concept readiness stage, attitude towards products
6. Defining the problem and research objectives
Developing the research plan for collecting information
Implementing the research plan –
collecting and analysing the data
Interpreting and reporting the findings
8. Primary Data Collection
Research
Observation, Survey, Experiment
Approach
Contact Methods Mail, Telephone, Personal, Online
Sampling Plan Sampling unit, Sample size, Sampling Procedure
Research
Instruments Questionnaire, Mechanical Instruments
9. Strengths and Weaknesses of Each Method
Mail Telephone Personal Online
Flexibility Poor Good Excellent Good
Quantity of data that Good Fair Excellent Good
can be collected
Control of interviewer Excellent Fair Poor Fair
effects
Control of sample Fair Excellent Fair Poor
Speed of data Poor Excellent Good Excellent
collection
Response Rate Fair Good Good Good
Cost Good Fair Poor Excellent
10. Types of Samples
Probability Sample
Simple Random Every member of the population has a known and equal chance
Sample of selection
Stratified Random The population is divided inot mutually exclusive groups (such
Sample as age groups) and random samples are drawn from each group
Cluster (area) The population is divided into mutually exclusive groups (known
Sample as blocks) and the researcher draws a sample of the groups to
interview
Nonprobability Sample
Convenience The researcher selects the easiest population members from
Sample which to obtain information, using their own judgment as to
which members are good prospects to collect information.
Judgment Sample The researcher finds and interviews a prescribed number of
people in each of several catagories.
11. Steps in the Market Research
Process
1. Define the research problem and establish research objectives
2. Determine the sources of information to fulfill the research objectives
3. Consider the costs and benefits of the research effort
4. Gather the relevant data from primary or secondary sources, or both
5. Analyse, interpret and summarize the results
6. Effectively communicate the results to the decision makers
Cateora and Graham pp. 216-221
13. Approaches to Estimating Market Sizes (making assumptions)
Technique Method Impact
Multifactor Analysis Analysing the target market A real assessment of the
potential by comparing it to target market, subject to
the US economy cultural differences
Coefficient of Income Evaluating the target market A good estimate of the
Sensitivity economy by detecting expected changes in the
marginal changes and their target market
implications
Trend Analysis Looking at the performance A simple way of estimating
of the target market, the target market growth
projecting into the future
Macrosurvey Observing relative level of A crude method of
development of the target determining the quality of
market to decide how ready the target market and its
it is for products potential
14. Multifactor Analysis
Evaluate a market on the basis of the size of another market.
Utilize indicators like refrigerator ownership, per capita, TV sets
Per capita, establishing a quality index for the target market.
i.e., US is 100%, target market may have index of 15%
Population of target market x as percent of US market.
Adjusted market figure x by sales of refrigerator, TV sales in US.
If the quality of the market is 15% of the US and population 10% of the US
The market potential is
0.15 x 0.10 = 0.015% or 1.5% of the US
15. Coefficient of Income Sensitivity
As income of a target market is set to change,
the impact of the change is not homogeneous.
A 1% change in income may bring a 27%
increase in food items and a 2% decline in public transportation.
16. Trend Analysis
Using past information about a target market’s income and
Consumption patterns, by using trend analysis, this information
Can be projected into the future.
17. Macrosurvey
In countries where inadequate data exists, can observe how advanced
Communities are. Then approximate the level of advancement of these
Communities.
25. A simple product checklist
Is there a need or demand?
Can the product be produced in the target market?
Can we distribute efficiently?
Can we price the product attractively?
Can our partner play the needed critical roles?
Can we compete with local competition?
Can we preempt future competition?
29. The Outcomes
(potential targets)
Key internal The process of Key external
influences on the product/market influences on the
Size and depth of change
development development development
Time
process process
The base potential for development
Where the business is
currently performing
Gibb & Scott 1988
30. Profile of business in terms of performance:
Performance
Base • Market trends: current product mix, market mix, competition
• Production trends: Utilisation, efficiency, quality
•Financial and Management: net worth, liquidity, gearing, trends
Key internal
influences on Administrative, marketing, production and Managerial
the resources and capabilities.
development
process
Key external Competition, market restrictions
influences on
the development
process
All influence the type of product and market development
that will take place
31. Environmental Analysis: Threats and Opportunities
Market: product position and prospects Competition: Traditional, new firms, new
industries, profits
Technology: Changes and developments The Economy: Growth, inflation, Law
Operating
Needs
Personal Business Strategies Operating
& Tactics Products
Objectives Objectives Budgets
Manpower
Finance
Feedback loops
Business Analysis: Strengths and Weaknesses
Product: 4 Ps or 4 customer wants Profit/Cash flow: its sources and uses
People: Management and Skills Facilities: age, technology and utilisation
Burns & Dewhurst 1993
32. Sources of Competitive Advantage
(The reason for any product development in a company)
Importance of price to customers, distributors, the extend of
Costs: demand elasticity
Knowledge: Stage of industry lifecycle, common industry knowledge
verses your own specialised knowledge
Links with customers, suppliers, distributors, relative
Relationships: power
Appropriate organisational structures, Ability to respond
Structure: to market, leadership.
33. Many Factors Change Markets and Give rise to Opportunities
Social
Social and cultural trends
and drivers.
Reviving historical trends
Product
Opportunity
Gap Economic
State of the economy
Technology
Shift in focus on where
State of the art and
to spend money
emerging
Level of disposable
technology income
Re-evaluating
existing technology
Cagan, J. and Vogel, C., M., (2002),
35. Potential Product Lifecycle IP Value &
Profitability Novelty
IP
Va
lue
Competitive
Concept
Risk Taking
Risk Taking
it
of
Pr
Pioneers Early Early Late Late
followers Majority Followers Time
Majority
38. Table 6.1. Drucker’s Sources of Innovation
Source Explanation Examples
The unexpected Success of a revolutionary product or the application of •Apple computer
success, failure or technology from one industry to another, sudden or •Rapid decline of Proton’s market
external occurrence unnoticed demographic changes caused by wars, share
insurgencies, migration, etc.
An incongruity A change that is already occurring or can be made to •Sugar free products and sugar
between reality as occur within an industry. It may be visible to those replacements due to concern for health
it actually is and inside the industry, often overlooked or taken for •Increasing demand for travel and
what it ought to be granted. holidays due to increasing incomes and
leisure time
Inadequacy of an An improvement in process that makes consumers •Caffeine free products
existing technology more satisfied based on an improvement or change in •Microwave ovens
or business process technology. •Mobile phones
Changes in industry New ways and means of undertaking business based •Health care industry
or market structure on identified opportunities or gradual shifting of the •Education industry – private education
nature of the industry.
Perceptual changes Changes in peoples awareness founded on new •Leisure and exercise industry aerobics
knowledge and/or values or growing affluence leading & gyms
to new fashions and tastes
Demographic Gradual shift of demographics in population by age, •Establishment of more retirement
changes income groups or ethnic groups, etc homes
New knowledge New knowledge or application of existing theoretical •Video and VCD industry
knowledge into an existing industry that can create •Robotics
new products not previously in existence •Biotechnology
39. Types of Innovation
Type Description Examples
Invention Totally new product Wright Bros – plane
Edison – light bulb
Bell – telephone
Extension New use or different application Kroc – McDonald’s
of an already existing product Bushnell – Atari
Wilson – Holiday Inn
Duplication Creative replication of an Wal Mart – Dept Stores
existing concept Pizza Hut – Pizza restaurant
Synthesis Combination of existing Smith - Fedex
concepts and factors Merryil Lynch – Home equity
into new use Financing
40. Dispelling the myths about
innovation
•Less than 5% of new products launched
on the market are successful
• Out of 100 new ideas, less than 2 become
a commercial reality
• Most companies are followers and not
innovators (even the Body Shop)
• Very few really novel innovations are
ever launched commercially
• Most new products are incremental steps
in enhancement, rather than something
completely new (similar to the
automobile industry)
64. Principals of Innovation
• Scan opportunities through purposeful
processes
• Be both conceptual and perceptual – get out into
industry
• To be effective, it has to be simple and focused
– has to be used by average people
• Pursue ideas that are going to make major
change
• Market knowledge is important
65. New Knowledge Innovation is the
most risky
Better to focus on other sources of innovation: ie,
applications of existing ideas and technologies
as new knowledge technology development is
extremely long term.
Bright ideas are the riskiest source of
innovation and rarely succeed.
Receptability is always the problem
(look at patents files but never
commercialised)
66. Opportunity Feasibility
Technical – feasibility of product or service
Market- Determination of market
opportunities and risks
Determination
New Market Financial – Analysis of financial of Feasibility
Feasibility and
resources
Organisational – Analysis of organisational
Capabilities and personnel
requirements
Competitive – analysis of the competition
67. Competitive Advantage
What specific competitive advantages does the product offer?
What are the competitive advantages of companies/products already in the market?
How are competitors likely to respond?
How will the initial advantage be maintained?
Buyers
Who will the customers be?
How much will each customer buy?
How many customers will there be?
How will the customers be located?
How will they be serviced?
68. Marketing of Goods and Services
How much will be spent on advertising and promotion?
What share of the market will the company be able to capture?
Time frame?
Who will perform the selling functions?
How will prices be set?
How will they compare to the competitors prices?
How important is location and how will it be determined?
What distribution channels will be used?
What are the sales targets?
Production
Will the company make or buy?
What are the sources available at reasonable prices?
69. Staffing
How will competence in each area of the business be developed and maintained?
Who will need to be hired? How will they be found and maintained?
Financing
How much will be needed for the development of the product or service?
How much will be needed for setting up operations?
How much will be needed for working capital?
What assumptions are sales (financial) forecasts made?
70. Specific Activities of a Feasibility Analysis
Technical Feasibility Analysis
Crucial technical specifications
Design
Durability
Reliability Market Feasibility Analysis
Product safety Market potential
Standardisation Identification of potential customers
Engineering requirements Potential customer dominant characteristics
Machines Potential market share
Tools Potential sales volume
Instruments Sales price projections
Work flow Market testing
Product development Analysis of market
Prototypes Market planning issues
Product testing Preferred channels of distribution
Field testing Impact of promotional issues
Plant location Distribution costs
Desirable characteristics
Suppliers
Environment
71. Specific Activities of a Feasibility Analysis
Financial Feasibility Study Competitive Analysis
Required financial resources Existing competitors size
Available financial resources
Financial resources
Market entrenchment
Potential reaction of competitors to
Newcomers by means of
Price cutting, advertising,
Organisational Capability Introduction of new products and
Other
Analysis
Potential new competitors
Personnel requirements
Required skill levels
Managerial requirements
Determination of individual responsibilities
Potential organisation development
72. Opportunities are a product of our mind
and these visions can become the
design of our future with skilful and
creative utilisation of scattered existing
and forgotten resources to create great
unimagined synergies. This is the true
power of creativity that God has given
humankind.
73. A Creative Person
enthusiastic, but risk assessor, who can think
both serially and laterally, good at assessing
opportunities, friendly, has good technical know-
how, able to access what he or she doesn’t
know, broad vision, an eye for detail, strong
motivation to overcome hurdles, can give honest
assessments and is aware of their personal
strengths and weaknesses
74. “Too much focus on
process, on a static agenda,
while it may get a lot done
initially, will tend to drive
core competencies towards
core rigidity.”
76. Industry Today is Looking for the
“Innovation” Solution
How does a company become
innovative and competitive?
77. The replacement of existing technologies is happening so fast
that 40% of the Fortune 500 companies that existed in 1975
do not exist today.
Griffin, A., (1997), The Drivers of NPD Success: The PDMA Report, Chicago,
Product Development & Management Association
Now, on average new products launched
in the last five years make up 33% of most successful
companies profits.
Foster, R., N., (2000), ‘Managing Technological Innovation for the Next 25 Years’,
Research-Technology Management, 43, 1., Jan/Feb., P. 20.
The cost of new technology is a powerful driver for
firms to expand product distribution over a large
number of international markets to recover investment
costs quicker. New technologies are thus a push factor
for the globalisation of companies due to the need to
obtain greater economies of scale.
82. Culture
Theories in action Stories, myths, heroes, artifacts, informal
behaviours
verses Espoused
Norms and Producti Values Organisational
group behaviour vity &
learning (single or
effective
double looped
ness
Leadership
Beliefs
Assumptions
83. Effect of Factors on Innovation
Variable Absent Extreme
Focus Random Tunnel vision
Strategic Thinking Switched off Unfocused
Creativity Unimaginative Over-imaginative, lose
sight of big picture
Ego Purposelessness Self-deluded
Interpersonal Individualistic and Hesitant to take
Relationships independent responsibility
Culture Self centered and Fanatical
moraless
84. Optimum Innovation
Innovation Qualities (at mean spectrum)
Component
Focus •Have control of the situation
•Put the project first
Strategic Thinking •Able to spot and work towards exploiting the opportunity
•Able to secure resources (beg, borrow or steal)
Creativity •Able to create both laterally and serially
•Spot and exploit opportunities
Ego •Inner need to make a difference
•Able to take risks
Interpersonal relationships •Able to network effectively
Culture •Spot and exploit causes
•Create social capital
85. Optimum Innovation
Innovation Qualities (at mean spectrum)
Component
Focus •Have control of the situation
•Put the project first
Strategic Thinking •Able to spot and work towards exploiting the opportunity
•Able to secure resources (beg, borrow or steal)
Creativity •Able to create both laterally and serially
•Spot and exploit opportunities
Ego •Inner need to make a difference
•Able to take risks
Interpersonal relationships •Able to network effectively
Culture •Spot and exploit causes
•Create social capital
86. The Creative Thinking Process
Incubation
Knowledge Creative
Ideas
Accumulation Process
Evaluation &
Implementation
87. Two Approaches to Creative
Problem Solving
Adaptor Innovator
Employs a disciplined approach, Approaches tasks from unusual
Precise, methodical approach angles
Is concerned with problem solving, Discovers problems and avenues
Rather than finding problems of solutions
Tends to be means orientated Questions basic assumptions
Is capable of extended details work related to current practices
Is sensitive to group cohesion and Has little regard for means; is
Cooperation more interested in ends
Has little tolerance for routine
work
Has no need for consensus;
often insensitive to others
Adapted from: Kirton, M. (October 1976) Adaptors and Innovators: A description and Measure,
Journal of Applied Psychology
89. Processes Associated with the Two
Brain Hemispheres
Left Right
Verbal Non verbal
Analytical Synthesizing
Abstract Seeing analogies
Rational Non-rational
Logical Spatial
Linear Intuitive
Imaginative
90. Ways to Develop Left and Right
Hemisphere Skills
Left Hemisphere Skills Right Hemisphere Skills
1. Step by step planning 1. Using metaphors &
of your work and life activities analogies to describe things
2. Reading philosophy 2. Taking off your watch
3. Establishing timetables when you are not working
for all your activities 3. Listening to music
4. Using and working with 4. Suspending your
a computer program initial judgment of ideas, people
TV shows etc
5. Recording your hunches,
feelings, and intuitions and
calculating their accuracy
6. Detailed fantasizing and
visualising things and
situations in the future
7. Drawing faces, caricatures and
landscapes
92. Field Dependent (unable to see figures)
● Favour Social science & education
● strong social skills, gravitate
towards others, more contextual
in approaches
● Good at seeing connections
between categories of information,
look at environment holistically
● Process information in chunks
● Tend to rely on social information
Holistic Approach to Issues
Field Independent (able to see figures)
● Favour Maths, engineering, science
● Function with more autonomy &
display a more detached approach,
● Focus on individual issues in the
scanned environment
● Can isolate issues in a complex setting
(block out what is not important)
Specific Issue Analysis