Market Opportunity and Consumer Analysis PDF

Market Opportunity and Consumer Analysis The Strategic Marketing Process Mission Situation Objective Identification Anlaysis Setting Strategy Marketing Evaluation Strategy and Control Development Step 1: M...

Market Opportunity and Consumer Analysis The Strategic Marketing Process Mission Situation Objective Identification Anlaysis Setting Strategy Marketing Evaluation Strategy and Control Development Step 1: Mission Identification A mission statement defines what an organization is, why it exists, its reason for being, its primary customers, the products and services it produces, and its geographical area of operation. Step 2: Situation Analysis Assesses and evaluates the market, customers, competitors, and the company’s internal and external environment. The objective is to identify the company’s strengths and weaknesses, as well as the available opportunities and possible threats Step 3: Objective Setting Marketing targets that are specific, measurable, attainable,realistic and time- bound(SMART). Targets includes sales revenues, market share or profits. These are use as basis for strategy selection and development. Step 4: Marketing Strategy Development Involves market segmentation, identification of target market, positioning, selection of broad marketing strategies and the translation of strategies into action plan. Can be broadly classified into three categories: Cost Leadership, Differentiation, and Focused. Cost Leadership This is a strategy primarily for achieving low cost leadership among industry competitors. Can be achieved through low cost supply contracts, overhead expense control, economies of scale and comprehensive cost-cutting efforts, among others. Differentiation Seeks to achieve superior product attributes and features that are different from industry competitors. Consumer preference for the company’s product. Focused The development of products and services primarily ensures that the needs and wants of this market are addressed and that satisfaction is provided Cost Leadership, Differentiation and focused strategies may be implemented through the ff. subcategories: Forward Integration This involves gaining ownership or increased control over distributors or retailers. business strategy that involves expanding a company's activities to include the direct distribution of its products. Forward integration is colloquially referred to as "cutting out the middleman." Backward Integration This involves gaining ownership or increased control over suppliers. Backward integration is a form of vertical integration in which a company expands its role to fulfill tasks formerly completed by businesses up the supply chain. In other words, backward integration is when a company buys another company that supplies the products or services needed for production.  Horizontal Integration This involves purchase of or increased control over competitors. Horizontal integration happens when one firm acquires another firm operating in the same industry or producing the same line of products. Companies that engage in horizontal integration may realize economies of scale, reduced production costs, synergy in marketing, increased revenue, among others. Both companies operated in the same industry (social media) and shared similar production stages in their photo-sharing services. Market Penetration The objective of this strategy is to increase market share of current products or services in current markets through greater and more intensive marketing offers. Market penetration is the amount of a product or service that is sold to customers compared to the estimated total market for that product or service. It's a measurement that can determine the potential market size or help develop a strategy for increasing the market share of a specific product or service. Market Development This strategy involves the introduction of existing products or services into a new geographical area or market. Market development is a growth strategy that involves selling your existing products or services to a new group of customers. It begins with market research where you: carry out a segmentation analysis of your existing market. shortlist those market segments which you feel you should pursue. Product Development This strategy involves the improvement of current products or services or the development of new products with the purpose of increasing sales. Product development -- also called new product management -- is a series of steps that includes the conceptualization, design, development and marketing of newly created or rebranded goods and services. Product development includes a product's entire journey, from the initial idea to its market release and later. Related Diversification This involves introducing new but related products or services. Related diversification occurs when a firm moves into a new industry that has important similarities with the firm's existing industry or industries. Because films and television are both aspects of entertainment, Disney's purchase of ABC is an example of related diversification. Unrelated Diversification This involves introducing new but unrelated products or services. Unrelated diversification means adding new products or services that are unrelated or dissimilar to your existing ones. For example, a media company might diversify into hospitality, or a pharmaceutical company might diversify into cosmetics. Retrenchment Halting or reversing declining sales and profits through cost or asset reduction. Retrenchment refers to the removal of employees, typically due to economic reasons like company restructuring, mergers, or cost-cutting measures. It isn't usually a reflection of the individual employee's performance but rather broader organizational challenges. Divestiture Selling a division or part of an organization. Divestiture is the strategic process of selling a business unit or an asset. It is one of the most complicated transactions in the M&A industry because the seller is not selling the entire entity but a portion that is part of a larger entity. Liquidation Selling all of a company’s assets, in parts or as a whole, for their tangible worth. Business liquidation is the direct conversion of assets to cash or cash equivalents by selling them to a user or consumer. Liquidation is typically an option if your business is insolvent and can't pay its bill or debts. When your business is liquidated, any remaining assets are paid to creditors and shareholders. Step 5: Strategy and Evaluation and control Periodic monitoring and evaluation are needed. Necessary to identify deviations and make necessary adjustments and corrections. The Tactical Marketing Process Determines the means or tactics to implement the strategies. Marketing Action Marketing Activity Strategies plans/Tactics Activities Timetables Monitoring and Activity Responsibility/ control Budgets Accountability The Marketing Microenvironment Includes forces that are internal to the company or those that are relevant to its operation. 1. The Company Functions include research and development , finance, operations and human resources. Marketing cannot function in a vacuum as marketing decisions must always be aligned with the organizational goals and strategies. 2. Suppliers Provide raw materials, utilities, labor, capital and equipment. The performance of suppliers can directly impact an organizations’ ability to continuously satisfy its consumers. 3. Market Intermediaries Intermediaries are channels that link the organization to its customer. The most common intermediaries are distributors, wholesalers and retailers. Also help in the promotion of products 4. Customers Create the demand for products and services They can either be customers or end- users, businesses, or organizations. 5. Competition Knowing a competitor is critical to the success of the firm Competitors may introduce new and/or improved products in the markets. 6. Publics Publics may include any individual or entity with an actual or potential interest in the company and its products or services. These includes shareholders, the community, financial institutions, media, the government and society. Identifying Strengths and Weaknesses Strengths and weaknesses can either be controllable or uncontrollable. The five other forces( suppliers, market intermediaries, customers, competition and the various publics) are essentially uncontrollable. Marketing Macroenvironment Factors that are external to the organization. These can either be influenced nor altered by the firm. Economic Macroenvironment The economic macroenvironment represents economic factors that can directly affect a business organization. Examples of these are inflation rate, foreign exchange rates, consumer spending shifts, and consumer prices index, among others. Economic fators are significant becasue they indicate the cost of doing business as well as consumer buying power. Politicolegal Macroenvironment The political macroenvironment includes both political and legal factors. Sociocultural Macroenvironment Each geographical area has a specific culture that dictates how business is conducted. Demographic Macroenvironment Consist of changes in population characteristics. These include population, gender, age, income composition patterns, civil status, and family size. Technological Macroenvironment Is composed of current and impending technological changes Natural Macroenvironment Refers to natural resource inputs and environmental concerns. Identifying Opportunities and threats The company shall now proceed to identify threats or opportunities among these factors. For example, a company can take advantage of the increased economic growth in the Visayas by developing the market through the opening of outlets in the region. Marketing Research A function under a business organizations’ Marketing Information System (MkIS) MkIS is primarily responsible for the gathering, analysis, and timely distribution of info for the use of marketing decision makers, Marketing Research Function responsible for acquiring and evaluating market and consumer- based info for decision making. The Purpose and Importance of Marketing Research Who uses the products, how it is used, how much or how little of it is used and the general attitudes of the consumer toward the product are not known explicitly. The ff. are some issues that can be addressed by Marketing Research: Identify viable new products and services Enable risk reduction Identify market opportunities and threats Determine the level of customer satisfaction Pinpoint and anticipate market trends or changes Decide on the best advertising medim Pre- test and post- test advertising and promotional campaigns Evaluate the results of packaging, brand name, and label testing Determine consumer price awareness and sensitivity Undertake location studies  Steps in the Marketing Research Process Research Need Problem/Opportunity Establishment of Research design determination definition research objectives determination Sample size and Determination of Information Data collection sampling plan data access sources/types forms design determination methods identification Report preparation Data Collection Data Analysis and presentation Step 1: Research Need determination The problem situation has to be assessed initially to determine if marketing research is need at all. Step 2: Problem/ Opportunity Definition To set the general research direction and operational parameters, the problem/opportunity must be defined in precision. Step 3: Establishment of research objectives To gather precise info to address informtion gaps. Research objectives must be clear, detailed and operational. Step 4:Research Design determination At this step, methods and procedures for the collection and analysis of info must be determined. Four Major Types of Marketing Research Design Observational- can be made any one time or regularly within a period of time. Experimental- includes laboratory experiments and test marketing. Results from two sets of samples are compared. Qualitative- includes focus groups, in- depth interviews and projective techniques. Uses only small no. of respondents. Quantitative- use of surveys. Used to test observations. Step 5: Information source/type identification Primary Information- refers to data gathered by the researcher for the specific problem. Secondary info- information acquired from previously conducted researches. Secondary Data- relatively easy and inexpensive. Information can also be sourced from internal data and focus groups. Step 5: Information source/type identification Internal Data-information collected from company records Focus Groups- a marketing research tool that involves a small group of people. Step 6:Determination of Data access methods Person administered surveys- either be administered through face to face or telephone interviews. Computer- administered- faster method of data access Self- administered- the respondents complete the surveys on their own. Hybrid Surveys- utilizes multiple data methods. Step 7: Data Collection forms Design Survey Questionnaire is the most common form used in data collection. It has the ff. major parts: Introduction- contains greeting, introduction, researcher intro and affiliation, purpose… Screening- series of questions designed to eliminate respondents who are not qualified to take part in survey. Core- body of the survey questionnaire Classification- questions used to classify respondents into diff. groups for stratification and analysis purposes. Several Types of questions are used in questionnaires: Categorical Response Questions- questions where answer is provided. There are 2 types which are dual choice- only two choices of answers (yes Or no); multiple choices- three or more choices of answers. Open- end questions- respondent can answer these questions in his/her own idea. Metric Questions- require respondents to answer using no. on a scale developed by the researcher. Step 8: Sample size and sampling plan determination It is ideal to give questionnaires to every member of the target population. This type of survey is called census. Sample size is determined using 3 variables: confidence level, variability and margin of error.. After the sample size has been calculated, the sampling plan is determined. Sampling Methodology can either be non- probability or probability based. Non- Probability Does not involve probabilities. All the members of the survey population do not have equal chance of being selected to be part of the sample. Types of Non- Probability Sampling Convenience sampling- when the researcher arbitrarily selects relatives , friends and/ or classmates, etc. to be given survey questionnaires. Judgment sampling- the researcher gives survey questionnaires to individuals who in his/her judgment, are qualified to participate in the survey. Referral sampling- the researcher asks initial respondents to provide other qualified respondents for the survey. Quota sampling- when the researcher specifies the proportions of various classifications to be included in the survey.  Types of Probability Sampling Simple Random Sampling- when the researcher selects survey respondents so that each member of the population has an identical chance of being chosen to be included in the sample. Systematic sampling- a probability sampling method where the researcher selects respondents using a sampling frame. Types of Probability Sampling Cluster sampling- sampling method where the survey population is divided into subgroup, each of which represents the entire survey population. Stratified sampling- where the survey population is divided into subgroups, and proportional samples from all the subgroups are included in the sample using principle or randomness. A subgroup is a group of units that are created under the same set of conditions. Step 9: Data Collection This the stage in the process where the questionnaires are administered to the selected respondents. Step 10: Data Analysis Collected Data is summarized and generalized. Step 11: Report Preparation & Presentation This serves as a basis for strategic or tactical decisions. Making Marketing Research based Decisions External factor research- the info acquired from these researchers can help marketers identify and anticipate macroenvironmental shifts. Observation research- an invaluable aid in determining consumer behavior. Test Marketing-based on results , the company shall to gauge the acceptability of a proposed product/service Target Market Studies- these help companies identify, quantify and understand its target market better. CONSUMER MARKETS AND BUYING BEHAVIOR Consumer Markets and Buying Behavior 1. Cultural- characteristics particularly play a large role in consumer interest and eventual purchase. An individual personal culture is developed over time. Therefore, a culture of “brand consciousness” or “keeping up with the Joneses” will favorably influence an individual’s attraction toward products and services with prestigious brand reputations. Subcultural factors are minute parts of one’s culture that provide specific identification of its members. This can include one’s nationality mix e.g. Tsinoy (Chinese – Filipino)  Consumer Markets and Buying Behavior 2. Social Class – is a status hierarchy in which individuals and groups are classified through economic success and accumulation of wealth The four most common social classes are: upper class middle class working class lower class Consumer Markets and Buying Behavior 3. Reference Groups – exert a strong influence on consumer buyer behaviour. Includes individuals or groups that influence consumer opinions, beliefs, attitudes, and behaviors. They often serve as inspiration. Consumer Markets and Buying Behavior 4. Aspirational groups – are groups that a person currently does not belong to but wishes to belong to or to be associated with. What aspirational groups purchase also influences an individual considerably, as he may feel that buying products services and brands makes him feel some degree of belongingness to the aspirational groups. Family – an even stronger influence This phenomenon is particularly true among Filipinos. Because of the length of time one spent with his family, an individual adopts the values, habits and philosophical orientation of his family, i.e. self-worth, spending habits, and general perspective and outlook towards life. Consumer Markets and Buying Behavior 5. Personal Factors – also play a sizeable influence in his buying behavior. STAGES OF A FAMILY’S LIFE CYCLE A useful guide to buying propensity was developed by William D. Wells and George Gubar- the nine stages of a family’s life cycle. The authors have modified it to fit to the Philippine context. THE STAGES OF A FAMILY’S LIFE CYCLE Stage 1: Bachelor/ Bachelorette stage They are highly dependent on their parents for finances in the form of allowances Stage 2: Young, newly married couple w/ no children Most have dual income as both spouses may be working They may be renting a house or temporarily staying with parent/in-law. If living with parent/in-law, they may share in household expenses They are may be renting their living facility or  Stage 3: Married couple, w/ eldest child below elementary age They spend their income on nursery and kindergarten education, food, children’s clothes, juvenile furniture, toys and trip to amusement parks. STAGES OF A FAMILY’S LIFE CYCLE Stage 4: Married couple, with youngest child six years old or over They spend primarily on school tuition, uniform, books and allowances They usually live independently in apartment condominium They may join social and civic clubs and begin investing in insurance. STAGES OF A FAMILY’S LIFE CYCLE Stage 5: Old married couple, family head still working, all children living on their own They have increased savings as result of reduce financial requirements Their expenditures include vacations, some luxury items, health fitness, vitamins and supplements. They initiate retirement and fund investments  STAGES OF A FAMILY’S LIFE CYCLE Stage 6: Widow/widower, in labor force They have substantial savings They may move out from conventional home to live in small condominium unit They spend on eating out, movies, other forms of entertainment, health and fitness, and dietary supplements They spend a lot of free times with friends who share familiar lifestyle Stage 7: Widow/widower, retired Pensioner They may be asked to move in by one adult children for better care They rarely go out alone. But when they do go out, it is usually host child’s family Consumer Markets and Buying Behavior Occupation – also plays an important indicator in the products and services he/she purchases. Blue collar workers purchase work boots and denims Students regularly buy school supplies such as pens, paper, and notebooks’ Economic capability - it is evident that individuals need money to purchase good and services. The more money that is available, the greater the amount and quantify of purchase. Five need levels identified by Abraham Maslow Maslow's hierarchy of needs is a theory of motivation which states that five categories of human needs dictate an individual's behavior. Those needs are physiological needs, safety needs, love and belonging needs, esteem needs, and self-actualization needs. Consumer Markets and Buying Behavior Perception – is the process by which people translate sensory impressions into a coherent and unified view of the world around them. Because of perception, consumers may view marketing stimuli in different ways. Three (3) perceptual processes guide an individual’s perception: Selective Attention - because consumers are exposed to hundreds of commercial messages each day, they tend to pay attention to only those that address a current need. Selective Distortion – pertains to the tendency of individuals to twist or ‘distort’ information to fit their existing mindset toward a brand Selective Retention – means that consumers tend to remember only the positive things that reinforce their attitudes and beliefs. Consumer Markets and Buying Behavior Learning – is a relatively lasting change in behaviour that is the result of experience. When a consumer purchase a particular brand of product and is completely satisfied with it, his/her positive experience with the brand is reinforced. Belief – is defined as confidence in the truth or existence of something not immediately susceptible to rigorous proof. On the other hand, an attitude is a settled way of feeling about someone or something, typically one that is reflected in a person’s behavior.