2Markets and Industries: What’s The Difference? A market is composed of individuals and organizations who:Are interested in and willing to buy a good or service to obtain benefits that will satisfy a particular need orWho want and have the resources to engage in such a transaction.
3Markets and Industries: What’s The Difference? An industry is a group of firms that offer a product or class of products that are similar and are close substitutes for one another.Markets are comprised of buyers; industries are comprised of sellers.
5Assessing Market and Industry Attractiveness Macro-levelThe analyses are based on environmental conditions that affect the market or industry, respectively, as a whole.Micro levelThe analyses look not at the market or the industry overall but at individuals in that market or industry.
6Macro Trend Analysis The demographic environment Aging AIDS Imbalanced population growthIncreased ImmigrationDeclining Marriage Rates
7Macro Trend Analysis The sociocultural environment Sociocultural trends are those that have to do with the values, attitudes, and behavior of individuals in a given society.Two trends of particular relevance today are:Greater interest in ethical behavior by businessesTrends toward fitness and nutrition.
8Macro Trend Analysis The economic environment Among the most far-reaching of the six macro trend components.Economic trends often work, to pronounced effect, in concert with other macro trends.The regulatory environmentPolitical and legal trends, especially those that result in regulation or deregulation, can have powerful impact on market attractiveness.
9Macro Trend Analysis The technological environment Convergence of the telecommunications, computing, and entertainment industries.The natural environmentTurning problems into opportunities:Finding ways to save energy.Finding new energy sources.Seeking market solutions.Opportunities in developing green productsImpact of depletion of natural resources
10Your Market Is Attractive: What About Your Industry? Porter’s Five Competitive ForcesThreat of newentrantsBargainingpowerof suppliersRivalry amongexisting industryfirmsBargainingpowerof buyersThreat of substituteproducts
11Challenges In Macro-level Market And Industry Analysis In order to analyze the attractiveness of one’s market or industry, one must first identify exactly which market or industry is to be analyzed.On the market side, the challenge often lies in sizing the relevant market.On the industry side, there’s the question of how narrowly or broadly to define one’s industry.
12Challenges In Macro-level Market And Industry Analysis Information sources for macro-level analysesTrade associations and trade magazines.Web sites of local, state, and federal governments.Almost all sources of information are now readily available on the Web.The key outputs of a competent macro trend analysis should include both quantitative and qualitative data.
13Understanding Markets at the Micro Level Some tests to be met for the market offering to be attractive:There’s a clearly identified source of customer pain, for some clearly identifiable set of target customers, which the offering resolves.It provides customer benefits that other solutions do not.The target segment is likely to grow.There are other segments for which the currently targeted segment may provide a springboard for subsequent entry.
14Understanding Industries at the Micro Level Opportunities are attractive when the company itself meets most or all of the following tests:It possesses something proprietary that other companies cannot easily duplicate or imitate.It has or can develop superior organizational processes, capabilities, or resources that others would find it difficult to imitate or duplicate.It’s business model is economically viable.
15The Team Domains: The Key to the Pursuit of Attractive Opportunities Some crucial questions:Does the opportunity fit what we want to do?Do we have the people who can execute on whatever it takes to be successful in this particular industry?Do we have the right connections?These questions address the remaining three of the seven domains in the opportunity assessment framework.
16Mission, Aspirations, and Risk Propensity Everyone and every company has views on how much risk is acceptable.A particular opportunity must also measure up to the expectations of the people who will pursue it.Whatever the tests for a given individual or company, they must be met if an opportunity is to be deemed attractive.
17Ability to Execute on the Industry’s Critical Success Factors Two key questions to ask in identifying one’s critical success factors, (CSFs):Which few decisions or activities are the ones that, if gotten wrong, will almost always have severely negative effects on company performance?Which decisions or activities, done right, will almost always deliver disproportionately positive effects on performance?
18It’s Who You Know, Not What You Know The people who are the best connected will be the ones who are best placed to change strategy before others know the winds have changed.Having a well-connected team in place enhances the attractiveness of the opportunity itself.The team is more likely to be able to ride out the inevitable winds of change.
19Putting the Seven Domains to Work If your company chooses to pursue unattractive opportunities, you’ll face tough sledding.The seven domains are not additive.Opportunities don’t just sit there; they change and may be further developed.
20Anticipating and Responding to Environmental Change Impact and timing of eventOpportunity/threat matrix is relatively simple way to identify, evaluate, and respond to environmental events that may affect the firm’s longer-term profitability and position.It enables the examination of a large number of events in such a way that management can focus on the most important ones.
21Opportunity/Threat Matrix for a Telecommunications Company in the U. K Opportunity/Threat Matrix for a Telecommunications Company in the U.K. in 2008
22Swimming Upstream or Downstream: An Important Strategic Choice Trends will always be present, whether marketing managers like them or not.The question is what managers can do about them.
23Take-AwaysMacro trends can and will profoundly influence the success of any business. Serving attractive markets, where trends are favorable is likely to bring more success than serving markets where trends are unfavorable.Competing in structurally attractive industries is likely to generate higher returns than in less attractive industries.
24Take-AwaysThe degree to which a company’s goods or services resolve genuine customer needs of a clearly defined target market and the degree to which its competitive advantage is sustainable over time are probably even more crucial to long-term success.
25Take-AwaysUnderstanding market opportunities is about more than understanding customers, competitors, and the environmental context. The capabilities and resources brought by the company itself are also important and are often overlooked.
26Take-AwaysThe seven domains are not additive. Strong scores, especially at the micro level or on the team domains, can outweigh the effects of flat or declining markets or structurally unattractive industries.