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Market Analysis. A Six-Step Approach to Understanding the Nature of Competitive Markets b Define the Relevant Market b Analyze Primary Demand for the.

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Presentation on theme: "Market Analysis. A Six-Step Approach to Understanding the Nature of Competitive Markets b Define the Relevant Market b Analyze Primary Demand for the."— Presentation transcript:

1 Market Analysis

2 A Six-Step Approach to Understanding the Nature of Competitive Markets b Define the Relevant Market b Analyze Primary Demand for the Relevant Market b Analyze Selective Demand for the Relevant Market b Define Market Segments b Assess the Competition b Identify Potential Target Markets

3 Defining the Relevant Market b A set of products and/or services that management considers to be strategically important. For example, a brand of herbal tea may have a large share of that market but a very small share of the total tea marketFor example, a brand of herbal tea may have a large share of that market but a very small share of the total tea market

4 Defining the Relevant Market ¶ Describe the Structure of the Relevant Market ä Classify competing product market alternatives at three levels. a. Competing brands within a product form b. Competing product forms within a product class c. Competing product classes within a generic need

5 Defining the Relevant Market · Define the Boundaries Within the Market. ä Important for determining “Market Share”

6 Market Structure for Soft Drinks Noncola Cola Regular Diet Caffeine Free Caffeine Free Caffeine Free Caffeine Free BRANDS

7 Defining the Relevant Market Describe Product Market Structure Identify potential competitors Classify competitors in terms of similarity Define Relevant Market Boundaries Broad Relevant Market Boundary Narrow Relevant Market Boundary Primary DemandSecondary Demand

8 Analyzing Primary and Secondary Demand Define Relevant Market Boundaries Primary Demand Identity of buyers of product form/class Factors impacting willingness and ability to buy the product form/class Selective Demand Type of buyer decision process Identification of determinant attributes

9 Questions on Buyer Identification ¶ Characteristics of Buyers or Users bCan buyers of this product category be classified by location, demographics, or lifestyle and psychographic factors? bIf so, how?

10 Questions on Buyer Identification · The Buying Centre bWho is involved in the buying process: Reference groups Colleagues Family members?

11 Questions on Buyer Identification ¸ Customer Turnover bIs there a high degree of customer turnover because of mobility or because purchase is tied to age or other demographic factors? bIf so, why?

12 Questions on Willingness and Ability to Buy ¶ Willingness to Buy b Would new or improved related products and services increase utilization? b What usage problems exist or are perceived to exist? b Is the product or service compatible with the values and experiences of the buyer? b What types of perceived risks are significant in the purchase of the product form?

13 Questions on Willingness and Ability to Buy · Ability to Buy b To what extent do purchase prices and other acquisition and maintenance costs inhibit purchase? b Are product size or space problems creating problems for customers? bIs the product available at a time and place that meets customer needs?

14 Market Structure for Holiday Travel

15 Questions on Selective Demand ¶ Decision Processes b How extensive is the search for information? b Do buyers use personal or impersonal sources of information? b Do buyers seek information about brand or supplier characteristics?

16 Sequential Process of Consumer Choice Total Brand Set TideTrendCheerGainSurfRinsoBoldOxydolWiskPurexUltraFab Awareness Set Tide Cheer Bold Wisk Fab Consideration Set TideCheerFab

17 Types of Decision Processes Consumers Organizations Extensive Problem Solving Limited Problem Solving Routinized Response COMPLEX SIMPLE New Task Modified Rebuy Straight Rebuy

18 Questions on Selective Demand · Determinant Characteristics b What are the benefits buyers hope to obtain from usage or ownership of the product? b What product attributes or characteriatics are viewed as providing these benefits? b What is the relative importance of the various benefits desired? b How much variation is perceived among the alternatives on each of the important attributes?

19 Attributes of Fast Food Restaurants 1 = unimportant 5 = very important

20 Attribute Ratings for Three Restaurants ATTRIBUTEABC Food Taste434 Quality and Cost354 Food Selection353 Menu Alternatives343 1 = Poor 5 = Excellent

21 Assessing Whether an Attribute is Determinant Irrelevant Attribute Optional Attribute Defensive Attribute Determinant Attribute LowHigh Low High Perceived Variation Among Alternatives Perceived Importance


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