Strategic Marketing- Fundamental Insights

PRESENTATION 3 OF 24 / 1
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved.
Managing Markets Strategically
Professor Noel Capon
R.C. Kopf Professor of International Marketing
Columbia Business School
New York, NY, U.S.A.
Professor Siddharth Shekhar Singh
Director Fellow Programme in Management &
Associate Professor of Marketing
Indian School of Business
Hyderabad & Mohali, India

Managing Markets Strategically
Section I: Marketing and the Firm
Section II: Fundamental Insights for Strategic Marketing
Chapter 3: Market Insight
Chapter 4: Customer Insight
Chapter 5: Insight about Competitors, Company, and Complementers
Chapter 6: Marketing Research
Transition to Strategic Marketing
Section III: Strategic Marketing
Section IV: Implementing the Market Strategy
Section V: Special Marketing Topics

CHAPTER 3
Market Insight

Insight for Strategic Marketing
Market Insight
Customer Insight Competitor
Company
Complementer
Insight

What Is Insight?
Source: Impact Planning Group, by permission

Market Insight
Anticipating
market
changes
Market
insight is
critical for:
Identifying
potential
opportunities
Laying a
foundation
for
developing
Opportunity
sizing
Identifying
areas to
differentiate

Building Blocks for Securing Market Insight
Market
Structure
Market
Insight
Market and
Product
Evolution
Industry
Forces
Environmental
Forces

Market Structure
• Market definition
A market comprises customers – people and organizations – who require products
and services to satisfy their needs … and have sufficient purchasing power – and
interest to buy what firms are offering.
• Market size factors
• Population size and growth
• Population mix
• Geographic population shifts
• Income and income distribution
• Age distribution
• Beware marketing myopia
• Approaches
• Build up
• SAM, TAM, PAM
• Hierarchical decomposition

Market Structure
Build Up: Illustration – Treating Aneurysms

Market Structure
SAM, TAM, PAM

Market Structure
Hierarchical Decomposition: Illustration – Entertainment Market

Market Structure
Definitions and Distinctions
Product class: A group of products offered by competing suppliers that
serve a subset of customer needs in a roughly similar
manner.
Product form: Several product forms comprise each product class.
Products within a product form are more similar in how they
meet customer needs than products in other product forms.
Product line: A group of related products that a single firm offers.
Product item: A subset of the product line that is uniquely identified.

Market and Product Evolution

Product Class and Product Form Life Cycles

Sales and Profit Margin Life Cycles

Truncated Life Cycle

Industry Forces
Suppliers
Direct
THE FIRM
Competitors
Indirect
Competitors
Buyers
New Direct
Entrants

Industry Forces
Direct Competitors
Traditional
direct
competitors
Acquisitions
and
divestitures
Mergers
Private
equity

Industry Forces
New Direct Entrants
Firm
employees
Geographic
expansion
Networks
New sales
and
distribution
channels
Start-up
entry
Strategic
alliances

Environmental Forces
Political
Economic
Sociocultural
Technological
Legal/Regulatory
Environmental (physical)
P
E
S
T
L
PESTLE
E

Political
Policy Variable General Goal
Competition policy Enhance competition
Employment law Protect employees
Government spending Implement government policy
Multinational agreements Enhance trade and investment
Political stability Enhance investment
Privatization Enhance competition
Regulation of financial markets Protect investors
Taxation policy Redistribute income

Economic
Economic Variable Impact on Economic Well-Being
Balance of payments Negative balance of payments means government must borrow –
increased pressure for higher taxes
Exchange rates Value of national currents. Low exchanges rates help exports; high
exchange rates are better for purchasing foreign goods.
Disposable income An individual’s income after paying taxes – available for spending and
saving. Higher is better.
GDP or GDP per capita The measure of a nation’s output, or output per person. Higher is better.
Inflation Rate of price increases. Lower is better, but too lows means deflation.
Interest rates Affect customer spending – especially for durables and business
investment. Lower is better, but too low may fuel deflation.
Savings rate Affects interest rates and consumer spending. Higher is better, but too
high means insufficient consumption.
Unemployment Population out of work. Lower is better, but too low and labor costs
increase.

Sociocultural
Cultural
Dimension
Elements of Cultural Dimensions
Aesthetics Beauty, good taste, color, music, brand names, architecture
Education Formal, vocation, primary, secondary, higher, literacy, human resources planning
Language Spoken, written, official, linguistic pluralism, hierarchy, international, mass
media
Law Common, code, foreign, home country antitrust policy, international, regulation
Politics Nationalism, sovereignty, imperialism, power, national interests, ideologies,
political risk
Religion Sacred objects, philosophical systems, beliefs and norms, prayer, taboos,
holidays, rituals
Social organization Kinship, institutions, authority structures, interest groups, mobility,
stratification, status systems
Technical and
material
Transportation, energy systems, tools and objects, communications,
urbanization, science, invention
Values and attitudes Time, achievement, work, wealth, change, scientific method, risk-taking,
community involvement

Sociocultural
• Cultural and subcultural groups
• Localization and globalization

Technological
Innovations
since
World War II
dry
copiers
color
television
integrated
circuits microwave
ovens passenger
jet aircraft
synthetic
and
optical
fibers
ATMs virtually
all
plastics
computers
antibiotic
drugs
digital
video
recorders
(DVRs)
communication
satellites
cellular
telephonet

Technological Forces
Illustration – Bank Transactions
Mode Cost/Transaction
Branch teller $2.50
Telephone $1.00
ATM $0.40
Quasi-personal response $0.24
Internet $0.10

Technological
• Sustaining technologies: improve performance for current products on
dimensions existing customers value
• Disruptive technologies: bring new and very different value propositions
• Firms often ignore or reject disruptive innovations
• inferior performance
• firm rewards – potential cannibalization

Industry Forces
Suppliers
Direct
THE FIRM
Competitors
Indirect
Competitors
Buyers
New Direct
Entrants

The Augmented Industry Environment
Suppliers
Direct
The Firm
Competitors
Buyers
New Direct
Entrants
Indirect
Competito
rs
Political
Economic
Sociocultural
Technological
Environmental (physical)
Legal/Regulatory

Market Insight
One Final Item
• The managerial process environment: concepts, framework, ideas, and tools
to lead and manage organizations

The Managerial Process Environment
experience curve benchmarking
value chain
core strategy
best-practice sharing
product portfolio
six marketing
imperatives
core competence
marketing audit
brand equity
re-engineering
synergy
balanced price waterfall
scorecard
key account
management
crossing the
chasm
positioning

Strategic Marketing- Fundamental Insights

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