Chapter 2: Marketing opportunity analysis.
Marketing opportunity analysis.
Market opportunity is an area of buyer’s need and interest that a company
has high probability profitable satisfying. Good marketing is the art of
finding, developing and profiting from these opportunities. The market
opportunities can be identified and determined by using following factors.
• Target market.
• Market requirement.
• Functional benefits.
• Service benefits.
• Emotional benefits.
Sources of market opportunities.
• Short supply.
• Improvement.
• Innovation.
• Weak competition.
• Change in customer wants.
• Environmental change.
Marketing environment.
A marketing environment encompasses all the internal and external factors that
drive and influence an organization's marketing activities. Marketing managers
must stay aware of the marketing environment to maintain success and tackle any
threats or opportunities that may affect their work.
According to Philip Kotler “Marketing environment refers to external factors and
forces that affect the company's ability to develop and maintain successful
transaction and relationship with its target customers.”
The marketing environment is the totality of internal and external factors that
affect the companies marketing decisions, goals, customers relationships, and
performance as a whole.
Micro environment.
A micro environment is the immediate surroundings of a company or organization,
including suppliers, customers, and competitors. The micro environment is also
known as the internal environment, the operating environment, and the business
environment.
The micro environment is important to companies because it affects their ability
to serve their customers, make profits, and remain competitive.
The micro environment includes:
1. Suppliers
2. Customers
3. Competitors
4. Intermediaries
5. Publics
Macro environmental trend and forces.
Macro environment refers to the external forces within an economy. Macro
environment factors like inflation, fiscal policy, monetary policy, consumer
spending, GDP, and employment rates considerably affect business operations.
Governments and institutions strategize policies based on these factors.
The macro environment comprises a range of external factors—demographic,
physical, natural, economic, technological, political, legal, and socio-cultural
conditions.
Economic Trends: The macro-economic environment analysis will identify trends
such as changes in personal disposable income, interest rates, inflation, exchange
rates and unemployment rates.
The macro-environment is made up of six different forces they are:
• Economic environment.
• Political environment.
• Demographic environment.
• Social-cultural environment.
• Technological environment.
• Ecological environment.
Corporate and divisional strategic planning.
Corporate Strategic Planning is a companywide approach at the business unitand
corporate level for developing strategic plans to achieve a longer-term vision. The
process includes defining the corporate strategic goals and intentions at the top
and cascading them through each level of the organization.
During the preparation of corporate strategic planning marketing firm need to
undertake following planning activities.
• Defining the corporate mission.
• Establishing strategic business unit.
• Assigning resources to each strategic business unit.
• Assessing growth opportunity.
• Organization and organizational culture.
Defining the corporate mission.
A corporate mission statement contains the goals and visions that a company has
set for itself and that it strives to achieve. It defines values that the company
identifies with and which serve as guidelines for customer relations.
A Mission Statement is a definition of the company's business, who it serves, what
it does, its objectives, and its approach to reaching those objectives. A Vision
Statement is a description of the desired future state of the company. An effective
vision inspires the team, showing them how success will look and feel.
Mission statement includes.
• Industry scope.
• Product and application scope.
• Competence scope.
• Market segment scope.
• Vertical scope.
• Geographical scope.
Business unit/divisional strategic planning.
A divisional strategy, or business strategy, means defining the specific goals and
activities of particular business units. While a company may have an overall
strategy of how they want to operate, the divisional strategy focuses on each
division or department.
Strategic Business Unit (SBU) implies an independently managed division of a
large company, having its own vision, mission and objectives, whose planning is
done separately from other businesses of the company.
SWOT analysis.
The overall evaluation of the business’s strength, weakness. Opportunities and
threats is called SWOT analysis. SWOT analysis is a strategic planning and strategic
management technique used to help a person or organization identify Strengths,
Weaknesses, Opportunities, and Threats related to business competition or
project planning. It is sometimes called situational assessment or situational
analysis. It consist of analysis of external and internal environment.
• Internal environment.
• External environment.
Goal formulation.
Goals are “what” a business unit wants to achieve. First perform aSWOT analysis.
Next, formulate goals with specificity as to time (by when it will be performed)
and magnitude or quantity (by how much it will be changed). An organization will
normally have a mixture of goals.
• Next, formulate goals with specificity as to time (by when it will be
performed) and magnitude or quantity (by how much it will be changed).
An organization will normally have a mixture of goals.
• Order your goals from broad to specific categories: for example from
increasing net earnings by 20%-dansk- to increase revenues by 15% and
reduce expenses by 12 % in certain areas.
• Confirm that your goals relate realistically to the results of the SWOT
analysis performed.
• Examine your goals to make sure they are not at cross purposes withone
another. For example, short term versus long term goals; sales goals versus
profit goals; high growth versus low risk; development of new products
versus deepening existing markets.
• This process is often called Management by Objective or MBO
Strategy formulation.
Strategy is “How” a business unit will achieve what it wants. MichaelPorter, HBS
professor and worldwide competitive strategy expert breaks types of strategy into
three categories:
• An Overall Cost Leadership Strategy
• A Differentiation Strategy
• A Focus Strategy
Program formulation.
Once strategies are set, programs have to be created to support the
eventual implementation of the strategy. The cost of this support and
implementation must be budgeted.
Implementation and Feedback:
Successful implementation of strategic planning is a function of clarity of
purpose and alignment in a company as much as anything else. This is
convincingly set forth in Built to Last. Feedback or the monitoring of results
and changes in the external and internal environment are as necessary a part
of a successful business as the creation of the strategy itself. As is often
quoted, “he only thing certain in life is change.”
What is SBU?
A strategic business unit abbreviated as SBU, is a small business unit or entity
within a larger organization managed independently. So it is an independently
managed division of a large organization with its own vision, mission and
objectives responsible for planning, developing, producing and marketing its own
goods or services. A strategic business unit (UBS) is a semi-autonomous corporate
unit that focuses on a product offering and market segment.
Marketings use various analytical tools for allocating resources among various
strategic business units. The popular tools are as follows.
• Strategic Business Units: SBU Model.
• The Boston Consulting Group Matrix- BCG Model:
• General Electric Matrix- GE Model
Strategic Business Units –SBU Model.
Strategic business unit (SBU) implies an independently managed
division of a large company, having its own vision, mission and
objectives, whose planning is done separately from other business of
the company. The vision, mission and objectives of the division are
both distinct from present enterprise and elemental to the long term
performance of the enterprise. Following are the characteristics of SBU
Model.
• Separate planning.
• Separate competitor.
• Separate management.
Industry Attractiveness:
Factors you could choose to base this on include:
1: Market size
2: Market growth
3: Political
4: Economical
5: Social
6: Technological
7: Environmental
8: Legal
Business Unit Strength:
Factors to determine how strong a unit is compared to others in its
industry include:
• Market share
• Growth in market share
• Brand equity
• Profit margins compared to competition.
• Distribution channel process – the strength of business.
Now you have the measurements you can plot your business units on the
GE matrix and depending on where they are plotted will determine your
strategy from one of the following:
Grow/Invest:
Units that land in this section of the grid generally have high market share
and promise high returns in the future so should be invested in.
Hold/Selectivity:
Units that land in this section of the grid can be ambiguous and should
only be invested in if there is money left over after investing in the profitable
units.
Harvest/Divest:
Poor performing units in an unattractive industry end up in this section of
the grid. This should only be invested in if they can make more money than is
put into them. Otherwise they should be liquidated.
Nature and contents of marketing plan.
Concept of marketing plan:
Marketing plan is the process that consist of analyzing current
situation information about marketing opportunities, selecting target
market, determining market objectives, designing and developing
marketing strategy or course of action to achieve these objectives and
allocating these resources to the ingredients i.e. marketing mix and
developing procedure and policies.
“The marketing plan is the central instrument for directing and
coordinating the marketing efforts”. Philip Kotler.
Nature of marketing plan.
• Purposeful.
• Primary function.
• Pervasive.
• Forward looking.
• Intellectual process.
• Continuous.
• Integrated process.
• Choice.
Contents of marketing plan.
• Executive Summary: A brief overview of the entire marketing plan,
highlighting key goals, strategies, and outcomes.
• Business Overview: A description of the organization's mission, vision,
values, and overall business goals. This section provides context for the
marketing plan.
• Market Analysis: An assessment of the target market, including market size,
trends, customer segmentation, competitor analysis, and SWOT analysis
(strengths, weaknesses, opportunities, threats).
• Marketing Objectives: Clear and measurable objectives that outline what
the marketing plan aims to achieve. Objectives should be specific,
attainable, relevant, and time-bound (SMART).
• Target Market and Buyer Personas: A detailed profile of the target market,
including demographic, psychographic, and behavioral characteristics.
Buyer personas represent fictional representations of ideal customers,
helping to tailor marketing strategies.
• Value Proposition: A compelling statement that articulates the unique value
and benefits that the organization offers to its target market, differentiating
it from competitors.
• Marketing Strategies: Broad approaches and tactics that will be employed
to achieve marketing objectives. Strategies may include product/service
positioning, pricing, distribution channels, branding, customer acquisition,
and retention strategies.