Marketing Analysis… Powering Design Innovation. Today.. • • • • • • • 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: • • • • • 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 25 20 Months • Sustained development of new products to replace others as they die. 15 0 25 Introduction 20 Maturation Decline Product Life Clycle 15 Projected Profit Projected Sales 10 5 Projected Profits and Sales 0 25 Maturation Decline 20 Product Life Clycle Months Months Projected Sales 10 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 • • • • • 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… • • • • • • 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.. • • • • • • 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.