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Measuring Marketing
• Difficulties
– Requires specific, analytical skill set
– Difficult to measure some areas, ie
advertising’s effect on sales:
• Lag effect
• Multiple distribution channels
• Intervening Variables
Measuring Marketing
• Benefits
– Improved product or service
– Determination of new customer segments
– Increased information on those things
that influence sales
– Overall increases opportunity
– Must be considered as “means to an end”
Market Characteristics
• Industry: Set of all actual sellers of a
product or service
• Market: Set of all actual and potential
buyers of a product or service
– Available market is set of buyers with interest
income and access to product
– Served market is that part of the available
market a company has decided to pursue
– Penetrated market is that set of consumers who
have already bought the product or service
Market Demand
• Market Demand is the total volume that would be
bought by a defined customer group in a defined
market environment under a defined level or mix
of industry marketing effort
• Mkt Demand is a function of a set of conditions,
not a fixed, solid concrete number, and those
conditions are constantly changing
– Economics
– Technology
– Socio-cultural factors
Markets
• Potential – who might be a candidate
• Available – who is not currently connected
to another brand or substitute product
• Qualified available – who has access and
income
• Served – which segment(s) of all possible
candidates are you able to reach
• Penetrated – who are currently your
customers
Market Characteristics, cont’d
• Expandable markets: Size is strongly
affected by level of industry marketing
expenditures/efforts
– Opportunity to build Primary Demand for
product or service category
• Non-expandable: Size is not much affected
by level of industry marketing effort.
– Need to increase selective demand for that
particular service or brand
Competitive Environment
• Market Share is that % of the total
penetrated market (buyers) held by a
particular company, product or brand.
• Mkt Share allows comparison with
competitors within reason:
– Differences in served markets
Competitor Analysis: Industry
Perspective
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Industry Structure
Entry Barriers
Mobility Barriers
Exit/shrinkage Barriers
Industry Cost Structures
Vertical Integration
Global Reach
Competitor Analysis: Industry
• Slow Growth market
• High Growth market
• Strategic shift signals
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R & D efforts
Relationship Building
Geographic refocusing
Management changes
Changes in Spending
Realignment of SBU’s
Competitor Analysis: Market
Perspective
• Segments by Customer Needs
– Segments by Geography
• Who is selling a product where?
– Substitute Products
• What else meets the same need?
• How is it alike or different?
Competitor Analysis
• Assess Strengths and Weaknesses (Competitive
SWOT)
• Estimate Competitor Reaction Patterns
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Laid back & complacent?
Selective, pick their battles?
Tigers, aggressive fighters for markets?
Stochastic, unpredictable?
• Determine Own Company’s Strategy based on
own SWOT and above information
Competitive Strategies
• Cost Leadership: low COST (not price) Producer
• Differentiation: differentiated product line(s) or
unique customer benefits
• Focused: narrow concentration on a small
segment of a larger market
• M-O-R or Unfocused: Non-specific customer
base or no clear strategy
• Value Leadership: superior customer value
– Cost, operational or product quality leadership
– Strong customer relationships
Competitive Positions
• Market Leader – largest market share
• Market Challenger – runner up which is
poised to overtake leader
• Market Follower – runner up which is
maintaining share or status quo
• Market Nicher – serves small segments
other overlook or choose to ignore
Market Leader Strategies
• Expand Total Market
– New users, new uses, increased usage of
product or service
– Benefit from increased sales
• Protect Market Share
– Defensive strategies
• Expand Market Share
– Aggressively pursue available markets or
competitor’s share
Defensive Strategies
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Position Defense
Flanking Defense
Pre-emptive Defense
Counteroffensive
Mobile Defense
Contraction Defense
Position Defense
• Attempt to Maintain Status Quo in Mkt
Share
• May require significant commitment in
company resources
• Inherent problems
– Competitor Innovation
– Changing Customer needs/tastes/expectations
Flanking Defense
• If Competitors choose weak areas of
business to attack
• Shore up weaker flanks:
– Expansion of product lines
– Product improvements
– Image management for company, products or
brands
Pre-emptive Defense
• Competitor Scanning
• Anticipate competitor strategies and actions
• Reposition ahead of time to prevent loss of
share/sales
• “No need to outrun any one you can
outsmart” - Garfield
Mobile Defense
• Approach customers from a broader
perspective than competitors
– Adjust products/services accordingly
– Identify and pursue new, additional markets
with same or modified product
• Diversify
Counteroffensive
• Assess damage fro a competitive
attack
• Respond with a stronger impact
Contraction Defense
• Controlled, intentional reduction of market
activity
• Reduce operational demands
• Refocus efforts, perhaps on more core
businesses
Challenger Strategies
• First define target and strategic actions:
– Attack
– Avoid
– Acquire
• Choose an attack strategy if required:
– Frontal, flanking, encircling: attack leading, weak or
all products
– Bypass: use technological innovation to leapfrog
– Guerilla: sporadic, unexpected attacks to draw focus
Follower Strategies
• Clone
– Closely copy all or part of competitors
marketing mix
• Imitate
– Copy some aspects but differentiate in others
• Adapt
– Build on, improve competitor’s offerings
Nicher Strategies
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End Use Specialist
Vertical Level Specialist
Customer Size Specialist
Customer Specific Specialist
Geographic Specialist
Product/Feature Specialist
Quality/Price Specialist
Service Specialist