Marketing Analysis… Powering Design Innovation.

Marketing Analysis…
Powering Design Innovation.
Today..
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Marketing Mix
SWOT Analysis
Product Life Cycles
Product Viability
Macro-Environmental Analysis
Competitor Analysis
Customer Analysis
The Marketing Mix..
The ingredients of the marketing mix:
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Product
Price
Promotion
Place
The four P’s
Marketing Mix…
What is the marketing mix for?
• The way in which differential
advantage may be achieved – and
sustained by manipulating the four
P’s
• There are more ‘P’s’ but we are
focusing on the main four.
Marketing Mix..
• Product = Product management,
New Product Development, Branding
and Packaging.
• Price = Cost, Discount Structure,
Terms of Business.
• Promotion = Advertising, Sales
Promotion, Public Relations,
Merchandising.
• Place = Customer Service, Physical
Distribution, Channel Management.
Questions to ask..
• Product:
1. Objectives of the Product – Who,
What Where and When?
2. What modifications may be made?
3. To what extent is the product
differentiated from the
competition?
These depend on many factors!
Price:
• What is an appropriate cost of the
product given manufacturing
overheads, differentiation of
product? (Perceived product value)
• What are the comparative costs of
other products in your range and
competitors range?
• When should cost be re-assessed?
• Price/promotion strategy?
• Sufficient profit!
Promotion..
• Promotional objectives – who, what
where, why (again)!
• Budget is a key one but perhaps not
so relevant to your project.
• Advertising research
• Choosing the right media
• Frequency of advertising
• Measuring effectiveness of
campaign.
Place:
• What levels of market coverage are
appropriate?
• What scope is there for
improvements to service?
• What are your competitors
distribution channels?
• What levels of dealer and distributor
loyalty exist.
• Do distributors have adequate
product knowledge
SWOT Analysis..
• Strengths, Weaknesses,
Opportunities and Threats.
• A lot to consider in this area as it is a
general overview of a company and
its market, its competitors in that
market etc.
• Some details..
Details to consider for SWOT..
• Market Factors: Reputation, previous
performance, competitive stance, customer loyalty,
breadth of product range, product modifications, quality
issues, geographical coverage, manufacturing costs,
customer service, pricing, advertising, new product
programme.
• Financial Factors: Investment capital,
profitability, sales, financial stability, margins.
• Manufacturing Factors: Production facilities,
Economies of scale, workforce, technical skill, supplies.
• Organisational: Culture, Leadership, Management
capabilities, adaptability.
Product Life Cycles…
• The life and death of products from
introduction to decline.
• Time scales depend strongly on the type
of market your in and are influenced by
design, marketing and promotional
strategies.
• Electronics for example is very fast
moving;
• Cars are often long terms products
• Again.. Many factors, like cost design and
even relationship influence lifecycle.
The notion of product
change
> The main purpose of the product life
cycle is to remind us of three
characteristics: (1) that products have a
limited life; (2) that profit levels are not
constant, but change throughout a
products life; and (3) that the product
requires different strategies at each
stage of the lifecycle (Kotler 1992)
> Within the Product Life Cycle a product
travels through a series of stages. The
ability to mange and react accordingly
to these stages determines the success
or failure of the product
Product Life Cycle (PLC)
>The PLC has the following principle
stages:
(1) introduction
(2) growth
(3) maturity
(4) decline
>The PLC is always measured against the
volume of sales in relation to time. It
must also be indicated that many
company's attempt revamp declining
products which often go through a short
period of rejuvenation
Principle phases within
PLC concept
Product Life Cycle (PLC)
(1) Introduction
The introduction stage is the official
birth of a product. It will at times
overlap with the late testing stage of
the development cycle. The design
focus in this stage is to monitor early
use of the design to ensure proper
performance, working closely with
customers to tune or patch the design
as necessary
Product Life Cycle (PLC)
(2) Growth
The growth stage is the most
challenging stage, where most
products fail. The design focus in this
stage is to scale the supply and
performance of the product to meet the
growing demand, and provide the level
of support necessary to maintain
customer satisfaction and growth.
Efforts to gather requirements for the
next-generation product should be
underway at this stage.
Product Life Cycle (PLC)
(3) Maturity
The maturity stage is the peak of the
product life cycle. Product sales have
begun to diminish and competition
from competitors is strong. The design
focus at this stage is to enhance and
refine the product to maximize
customer satisfaction and retention.
Design and development of the nextgeneration product should be well
underway at this stage.
Product Life Cycle (PLC)
(4) Decline
The decline stage is the end of the life
cycle. Product sales continue to decline
and core market share is at risk. The
design focus in this stage is to
minimize maintenance costs and
develop transition strategies to migrate
customers to new products. Testing of
the next generation product should
begin at this stage.
Product Life Cycle (PLC)
> Consider the life cycle of a product
when planning and preparing for the
future
> During the introduction phase, work
closely with early adopters to refine and
tune products
> During the growth stage, focus on
scaling product supply and
performance
> During the maturity stage, focus on
customer satisfaction through
performance enhancements and
improved support
Product Life Cycle (PLC)
> During decline, focus on facilitating the
transition to next generation products
> Note that the development cycle for the nextgeneration product begins during the growth
stage of a current-generation product
> The seminal work on the product life cycle is
"International Investment and International
Trade in the Product Cycle" by Raymond
Vernon, Quarterly Journal of Economics, 1966,
vol. 80, p. 190-207. A contemporary review of
the product life cycle is found in Marketing
Management by Philip Kotler, Prentice-Hall,
11th ed
Product Life Cycle (PLC)
>Branded products have been found to
have short product life cycles. The life
expectancy of a new branded product is
approximately 3 years, and shortening.
It is also common for existing brand
names are used to launch products
forms: eg: i-tunes i-touch i-phone i-mac
i-pod...
Standard Product Life
Cycle (PLC) Curves
Standard Product Life
Cycle (PLC) Curves
> The main implication of the PLC is to avoid
having a high proportion of a company's
products at the end of their life cycles. Drucker
(1963) has established that there are six
categories of products which relate to the
notion of product elimination:
(1) Tomorrow's Breadwinners
(2) Today's Breadwinners - yesterday's
innovation
(3) Products capable of contributing to profit
with substantial help
(4) Yesterdays Breadwinners
(5) Also Ran's
(6) Failures
Standard Product Life
Cycle (PLC) Curves
> The purpose of these categories is to determine
which products should be maintained, built upon or
eliminated. The PLC also provides valuable
information for analytical tools (such as the Boston
Matrix and GEC model)
> Many of the lifecycle curves indicated are
generalised and the shape of curves will vary
widely from product area to area and from
company to company
> It must also be noted that there is nothing fixed
about the length of a cycle or the length of its
various stages
Standard Product Life
Cycle (PLC) Curves
> It has been suggested that the length of
the cycle is governed by:
(1) the rate of technical change
(2) the rate of market acceptance
(3) the ease of competitive entry
Sustained product development.
Projected Profits and Sales
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20
Months
• Sustained development of new
products to replace others as
they die.
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Introduction
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Maturation
Decline
Product Life Clycle
15
Projected Profit
Projected Sales
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5
Projected Profits and Sales
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25
Maturation
Decline
20
Product Life Clycle
Months
Months
Projected Sales
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5
Projected Profits and Sales
Introduction
Projected Profit
15
Projected Profit
Projected Sales
10
5
0
Introduction
Maturation
Decline
Product Life Clycle
Product Design methods for controlling
life cycles..
• Built in Obsolescence.
• PDS’s (Product Design Specifications).
• Looks at – useful service life,
maintenance, usage environment,
manufacturing quality and quantity in
relation to price and target market. Sets
tolerances, degradation of technologies
etc.
• Introduction of new products.
• Re-promotion.. Target new markets!
McDonalds – bringing grease to new
nations!
Built in Obsolescence
New Product Design Process..
Macro Environmental
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PEST Analysis –
Political
Economic
Social
Technological
Political..
• What legal developments are likely,
nationally and internationally that
may affect your market strategy?
• Which governments and
organisations should be monitored?
• Legislation and Standards
development
• Political implications: regimes, wars
other laws.
• Government policies, tax, imports
etc.
Economic..
• Unemployment, credit, savings
house prices – affects consumer
spending etc.
• Economic growth rates and income
levels, disposable income.
• Changes in size and distribution of
population due to economic
change?
Social..
• Consumer lifestyles and values –
environmentally conscious people.
• Attitude to government and
economic policy, media.
• Attitudes towards the company’s
product and services… important!
• PAN-AM
• Shell, BP
• McDonalds
• Smoking
Social influence..
Technological…
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What changes are taking place in product and process technology.
Replacement technologies
Positioning to capitalise on technological developments.
Consider implications:
Technology Leapfrogging..
Robotic laser spot welding in the motor industry and mechanised
production lines.
Design for sustainability..
• Eco – Design.
• What is likely to happen to the cost
and availability of natural resources
for production?
• Contingency plans to cope with
enviro-issues.
• Legislations
• Company image – JCB
Competitor Analysis..
• Competitor Analysis seeks to:
• Provide and understanding of your
competitive advantage/disadvantage
relative to your competitors
positions.
• Gains insights into competitor
strategy.
• Give and informed basis for
developing future strategies and
advantages over you competitors.
Why?
• Competitor analysis idealism for
companies:
• To survive
• To handle slow growth
• To cope with change
• Exploit opportunities
• Become intuitive
• Make better decisions
• Stay competitive
• Avoid surprises.
Not keeping and eye on the competition..
• 1959 – Xerox develop the plain paper
photo copier – huge success and
cornered the world market by ‘79!
• Failed to monitor competition..
Canon, Ricoh and Minolta
introduced smaller cheaper
versions.
• Xerox shares went from $125 per
share to $25 per share in 1992.
What to do..
• Define your competitors – who are
there, how many, obtain their market
share and financial details to see
who are you direct and in-direct
competitors.
• Your position in the market, leader,
aspiring, challenging.
• Intensity of competition – high,
medium, small, none!
• Likelihood of new entrants
• Tactics and strategy planning.
• Competitors likely response!
Customer Analysis.
• So has been done during your work
identifying your market segments in
demographic study – age ranges etc.
• You know the identity of your
customer!
• Now we can look at how they may
act, and why they will buy our
product over others.
Basic buyer analysis..
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What do they buy?
Why do they buy?
Who is involved in buying?
How do they buy?
When do they buy?
Where do they buy?
Buyer Behaviour Model..
External Stimuli
Buyers Black Box
Buyer Decision
Political,
Economical
Political,
Technological
Buyer
characteristics:
Cultural, Social,
Personal.
Product: Quality,
suitability,
aesthetics,
ergonomics
usability.
Product, Price,
Advertising
Problem/desire.
Brand recognition
Distribution.
Searches from
information.
Dealer influence,
knowledge.
Evaluation.
Quantity.
Decision.
Purchase timing.
Buyer thinking..
Changing customers..
• Development of new value systems
• Emphasis on high quality for less money
‘perceived value for money’
• Higher levels of price awareness and
information.
• Less technophobia.
• Increased demand for new products,
faster life cycles. ‘disposable society’
• Lower levels of brand and supplier
loyalty.
• Environmental awareness.
• Changing roles of men and women.
Group Activity…
• Brief SWOT and PEST analysis of
Different products..
• Landmine.
• Mobile Phone.
• Alco pops.
• Dirty Great 4x4.
• Big Mac.
• Fur Coat.
• Cigarettes.
• Rolex.