1. External Analysis

2. OVERVIEW External Analyze Global Societal (Macro) Factors
Analyze Global Task (Micro) Factors
Industry
Competitors

3. SOCIETAL (MACRO) TECHNOLOGICAL TASK (MICRO) Industry ECONOMIC
POLITICAL/
LEGAL
INTERNAL
Competitors
SOCIOCULTURAL

4. INDUSTRY Definition: Share Analysis & Forecast
Group of firms producing a similar product or service
Often defined by government (SIC codes), analysts (Valueline and Investment Analyses)
Share Analysis & Forecast
Financial Trends & Forecast
Porter’s 5 Forces of Industry Competition

5. Overall Assessment of Competitiveness
Potential
Entrants
Five Forces Model
Rivalry
Among
Firms
Buyers
Suppliers
Substitutes

6. Industry Analysis Market Share Analysis Examples
Definition of “market”
Definition of competitors
Examples

7. Segments Business Segments Geographic Segments Customer Segments
Johnson Controls has 4
Auto; Controls; Plastic; Battery
Geographic Segments
U.S.; Europe; Pacific, etc.
Customer Segments
home market; business market; government market.
Market Segments
fruit-beverage market
alcoholic beverage market

8. Two Segment Questions External question: Internal question:
What share of the total market do we have?
Internal question:
How much does that market contribute to our:
Sales; Net Income; Assets

9. Industry Analysis Con’t.
Financial Analysis
Sales
Net Income
Other Indicators
Ratios

10. Competitor Analysis Who Are the Existing and Potential Competitors?
What Strategic Groups Can Be Identified?
What Are Their Levels of Sales, Share and Profits?
What Are Their Growth Trends?
What Are Their Strengths, Weaknesses, Strategies?

11. U.S. Restaurant Chains Strategic Groups High Red Lobster Olive Garden
Bob Evans
Shoney’s
Denny’s
Pizza Hut
Chi-Chi’s
IHOP
Price
McDonald
Burger King
Wendy’s
Low
Limited
Menu
Full
Menu
Product-Line Breadth

12. Levels of Market Competition
Product Form - brands which directly compete
Product Category - products with similar characteristics
Generic Competition - products which satisfy the same customer needs
Budget Competition - products which compete for the customer’s budget

13. Finding Hidden Competitors
Although there may be many suppliers or brands of a product, customers may see only a small number as suitable
Use research to identify your relevant competitors by determining your customers’ acceptable sets of suppliers or brands plus the criteria which distinguishes suppliers or brands

14. Market Structure Analysis
Understanding Consumer Perceptions of Products and Brands in a Market
Use of Product Mapping Technology to Visually Display Relationships among Products or Brands and Attributes which Define the Space
Can be Used to Define Competitors

15. Which Competitors to Analyze?
Number Depends on
Planning Horizon - the longer the time horizon, the more opportunity there is for potential competitors to enter
Market Rate of Change - the faster the rate of change the greater the opportunity for new entrants

16. Which Competitors to Analyze?
Four competitors should always be included:
The market leader (largest share)
The most profitable competitor
The competitor most like us
The fastest-growing competitor

17. Competitor Strategic Profile
Provide users with a broad understanding of competitive strategy, including management, goals, capabilities, business/market selection criteria and likely competitive behavior.
Include description, direction, assessment of strategies and implications, in terms of threats and opportunities.

18. Information Required Cost structure of competitors
Timing of competitor market entry
How competitor will respond to a new product introduction, price change, etc.
How competitors are positioned in the market
Competitors’ product performance and degree of customer satisfaction/loyalty

19. Benchmarking 1. Determine which functions to benchmark
2. Identify key performance variables to
measure
3. Identify the “best-in-class” companies
4. Measure performance of “best-in-class”
companies

20. Benchmarking 5. Measure your own performance
6. Specify programs and actions to meet
and surpass the “best-in-class”
7. Implement and monitor results

21. Market Analysis How Attractive Is the Market or
Industry and Its Submarkets?
What Are the Forces Reducing
Profitability in the Market?
What Entry and Exit Barriers?
What are the Growth Projections?
What are the Cost Structures?
What are the Profitability Prospects?

22. Market Analysis What Are the Alternative Distribution Channels
and Their Relative Strengths?
What Industry Trends Are
Significant to Strategy?
What Are the Current and
Future Key Success Factors?

23. Customer Analysis What Are the Major Segments?
What Are Their Motivations and Unmet Needs?

24. Market Segmentation
The process of dividing large heterogeneous markets into smaller homogeneous subsets of people or businesses with similar needs and/or responsiveness to marketing mix offerings.

25. Market Segmentation
A managerial strategy that adapts a firm’s marketing mix to best fit the various consumer demand curves existing in a market.
An adaptive strategy that seeks to obtain competitive advantage by doing a better job of satisfying customer requirements.

26. Steps in the Market Segmentation Process
1. Analyze the Market
Size and Structure
Attitudes and Usage
Competitive Position
2. Develop Segment Profiles
Identify Factors Which Differentiate Segments
Describe Characteristics and
Behavior of Segments

27. Steps in the Market Segmentation Process
3. Select Target Segments Which
Represent Best Market Opportunity
4. Design Marketing Program for
Each Target Segment
Positioning
Marketing Mix

28. Steps in the Market Segmentation Process
5. Analysis and Appraisal
Do We Have the Resources?
How Flexible Is Our Approach?
Does Target Segment/Strategic Plan Meet Our Objectives?
Does Target Segment/Strategic Plan Build on Our Strengths?

29. Bases for Consumer Market Segmentation
State of Being: Demographic, Geographic
State of Mind: Psychographic
Social Class, Lifestyle
Personality, Attitudes, Values
Product Usage:
Users vs. Non-Users of Brand
Heavy vs. Light Users
Users vs. Non-Users of Category
Usage by Situation
Benefits Sought

30. Segmentation Criteria
Group Identity
Within Segment Homogeneity
Between Segment Heterogeneity
Sufficient Size
Measurable Market Potential
Clear Variations in Behavior Relative to Other Segments
Influence Via Available Media
Segment Can Be Reached Efficiently

31. SUMMARY External Why do an External Analysis?
Analyze Global Societal (Macro) Factors
Analyze Global Task (Micro) Factors
Industry
Competitors
Why do an External Analysis?
To identify opportunities and threats.