Third seminar for my Managing Marketing Processes course in the MGM program at the Stockholm School of Economics, http://www.hhs.se/EDUCATION/MSC/MSCGM/Pages/default.aspx
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Managing Marketing Processes_Seminar 3
1. Seminar 3
Managing Marketing Processes
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Marketing Research Processes: Analyzing
the Market and the Competition
Robin Teigland
Master of General Management
Stockholm School of Economics
September 6, 2013
5. 5
Industry definition
Technology (GSM)
Buyer (Needs driven)
Geography (US, Sweden)
““A group of firms producing products that areA group of firms producing products that are
close substitutes for each otherclose substitutes for each other””
Porter
6. 8
Porter’s five forces of competition
ENTRANTS
SUPPLIERS BUYERS
SUBSTITUTES
INDUSTRY
COMPETITORS
Rivalry among
existing firms
Threat of new entrants
Threat of substitutes
Bargaining
power of
suppliers
Bargaining
power of
buyers
http://www.youtube.com/watch?
v=mYF2_FBCvXw&feature=channel
Porter, 2008
7. Threat
of
Potential
Entrants
Bargaining
Power of Buyers
Bargaining Power
of Suppliers
Threat of
Substitutes
Rivalry Between Competitors
• Identify Competitors and intensity
of Rivalry amongst competitors.
• Briefly explain.
•Identify Buyers and
Bargaining Power of each.
•Briefly explain.
What business segment or industry is being considered:
___________________________________________
•Identify Suppliers and
Bargaining Power of each.
•Briefly explain.
•Identify Substitutes and
the threat level of each.
•Briefly explain
•Identify Potential Entrants and
the threat level of each.
•Briefly explain.
Is this an attractive industry?
Briefly explain, why or why not?
Process steps:
1. Identify industry or segment boundaries.
2. Identify players in each Force using case facts.
3. Assess level of threat, power, intensity of each Force
using case facts and course concepts.
4. Make final assessment of whether it is an attractive
industry in which to compete using results of 5
Forces analysis to support your view.
Industry Level Analysis: Porter’s Five Forces
9
8. Group Assignment – Part A
How powerful are suppliers in this industry? What are
the implications for the company’s business
relationships?
How powerful are buyers in this industry? What are the
implications for the company’s pricing strategy?
Can customers substitute other goods or services
for the company’s offering? What are the implications
in terms of customer loyalty for this company?
Can the company or competitors easily exit the
industry? Can more rivals easily enter the industry?
What are the implications for the company if
environmental conditions threaten profitability?
10
9. Marketing Plan Teams
11
MGM MARKETING
FALL 2013
GROUPS PREFERENCES
DRAGON
1. B2C (Fortune 500) Product
THE MOJITOS
1. B2C (Fortune 500) Service
PEAK PERFORMANCE
1. B2B SME Service
ORANGE
1. B2C SME (<250) Product (ASSESSIO)
OPERATION BRAHMA
1. B2B SME (<250) Product (VETROLIFE)
THE TRANSFORMERS
1. B2C SME Services (LINAS MATKASSE)
13. Rising interest in ethnography
“Ethnography or observational research has
drawn significant attention recently, not only in
the market research and marketing fields but in
the mass media as well …all starts by doing
something simple – keenly watching
consumers, fact to face, knee to knee and
listening, with ears, eyes, heart, brain and your
intuitive sixth sense.”
Procter & Gamble
ex-CEO A.G.
Lafley
Tesco: http://www.youtube.com/watch?v=fGaVFRzTTP4
20. Group Assignment – Part B
How can this market be described broadly in terms of product, geography, and
demographics?
If you are researching a consumer market,
approximately how many people, families, or households are in the market?
what, specifically, are the main influences on buying behavior in this consumer market?
If you are researching a business market,
approximately how many and what type of organizations are in the market for the product?
what characteristics such as turnover, number of employees, and other descriptions relevant to
the product apply to customers in this business market?
What changes are currently affecting (or will soon affect) this consumer or
business market?
What relationships and organizational considerations have the most influence
on buying in this business market?
Prepare a 2-3 page ppt presentation summarizing your comments.
Be prepared to share your presentation with the rest of the class.
40
21. Marketing Plan Teams
41
MGM MARKETING
FALL 2013
GROUPS PREFERENCES
DRAGON
1. B2C (Fortune 500) Product
THE MOJITOS
1. B2C (Fortune 500) Service
PEAK PERFORMANCE
1. B2B SME Service
ORANGE
1. B2C SME (<250) Product (ASSESSIO)
OPERATION BRAHMA
1. B2B SME (<250) Product (VETROLIFE)
THE TRANSFORMERS
1. B2C SME Services (LINAS MATKASSE)
Notas do Editor
Tieto Enator Vision: - The world's leading provider of high-value-added IT services in selected vertical markets Strategy: - Global leverage of vertical expertise - Solutions - Partnerships Mission: - Building the Information Society Values: - Customer benefit & Personal growth Banking & Insurance IT services for banking, finance and insurance Telecom & Media IT services for telecom and media industry Healthcare & Welfare IT services for healthcare and welfare Government, Manufacturing & Retail IT services for central and local government, manufacturing, retail and logistics Forest & Energy IT services for forest and energy industries Processing & Network End-to-end processing and network services
Depends on purposes and context of analysis Which are the groups of firms that compete to supply a particular service or product? Market – defined by substitutability – Longer term the decisions, the more broadly the market should be considered since substitutability is higher in long term than in short term Precise boundaries are not greatly important
Three horizontal forces and two vertical forces Picture from Grant 2008 All competing to get a share of the profits
Process steps: Identify industry or segment boundaries. Identify players in each Force using case facts. Assess level of threat, power, intensity of each Force using case facts and course concepts. Make final assessment of whether it is an attractive industry in which to compete using results of 5 Forces analysis to support your view.
Threat of entry rather than actual entry may be sufficient to ensure that established firms constrain prices People express – american airlines Effectiveness of barriers to entry influence rate of profit - > industries protected by high entry barriers tend to earn above average rates of profit. Capital requirements and advertising appear to be particularly effective impediments to entry. Effectiveness depends on resources and capabilities that potential entrants possess But some entrants possess resources that allow them to surmount entry barriers – virgin with its brand name, google,
Concentration in the market – more concentrated –>less competition Diversity of competitors – more alike companies are in structures, strategies, and top mgt mindsets ->less competition Industries where strategic groups may be less competition pharmaceuticals, perfumes, restaurants, management consulting services High fixed costs to variable costs ratio – then more competition, airlines,
38 L onger duration than product life cycle D emand growth – I ntroduction – sales small, early adapters, customers few G rowth stage – accelerating market penetration – product technology becomes more standardized, and prices fall, mass market M aturity – slowing growth - new demand gives way to replacement demand, market saturation D ecline – new industries challenge industry w ith technologically superior products Intro stage – not so much rivalry but profits not so high since heavy investments Growth phase that there is higher profitability Maturity – price competition but other forces degree of rivalry Creation and diffusion of knowledge – competition between alternative technologies and design Outcome of competition is dominant design KSFs differ dependingon phase in ILC
42
Few buyers * Large buyers * Many companies sell the same product/service * Buyers are capable of backward vertical integration * It is possible to substitute the product/service * Buyer´s knowledge about the industry is great Can prices for bottlers vs auditing costs for company Buyer ’s information – ability to compare prices across sellers or qualities of product
Few suppliers * Large suppliers * No substitutes for the supplier ´ s products/services * The supplier is capable of forward vertical integration * The supplier´s products are differentiated, which make it expensive for the company to change supplier More concentrated No substitutes Not important customer Important input Differentiated product and/or high switching costs Threat of forward integration
Pharmaceuticals - 17 year patents! Potatoes- substitutes rice, noodles.. Tobacco – addiction How sensitive are they to price increases – gasoline… Price elasticity! Higher prices make them change! Or technology, social changes, new needs! The following factors can make the threats of substitutes larger: * Existing products/services become obsolete * Non differentiated products/services What can a company do to avoid substitution? T ravel agencies, newspapers – internet has provided substitutes for these M ore complex the product, the more difficult to discern performance differences – think strategic management consulting
The Industry Environment lies at the core of the Macro Environment. The Macro Environment impacts the firm through its effect on Industry Environment. 1. What environmental factors are affecting the organization? 2. Which of these are the most important at the present time? 3. Which of these are the most important in the next few years? PESTEL-analysis is a tool – not a key. PESTEL stands for P olitical, E conomic, S ocial, T echnical, E nvironment and L egislative. It is a strategic planning technique that provides a useful framework for analysing the environmental pressures on a team or an organisation A PESTEL Analysis can be particularly useful for groups who have become too inward-looking. They may be in danger of forgetting the power and effect of external pressures for change because they are focused on internal pressures. Help people make their assumptions explicit Important to look forward and at future impact of envtal factors which may be different from past impact. Usually will be combined effect of some of these separate factors that will be important rather than any single factor Plays role in focusing organizations on choices open to them and the constraints and risks involved in these choices. Political – threat of terrorism, Economic – unemployment levels Social – demographic changes Tech – development of new/subst products Environmental – antipollution Legal - antitrust