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IV. Execution A. Implement B. Monitor C. Control D. Adapt The first stage, the Situation Analysis, combines internal analysis of the organization with external analysis of its customers and the competitive environment. The fundamental questions to be answered include: What are target buyers needs?; What do we do well?; and What are competitors doing to serve
those needs? Careful analysis of the firms situation - past, current, and future - provides a foundation for determining how the firms resources can best be deployed in terms of marketing strategy and tactics. The purpose of the Problems and Opportunities stage is to distill what has been learned from the situation analysis. The result should be a limited set of key factors that play a role in the decision-athand. To gain a better understanding of the firms situation, it is useful to prioritize the factors identified. A useful approach to doing so is to provide an argument for whether the overall situation is favorable or unfavorable. After analyzing the firms situation and identifying the key problems and opportunities faced by the firm, the information for creating an appropriate marketing strategy is in place. By analyzing the organization, its customers and the competitive environment, there is an increased likelihood of developing superior marketing strategy and tactics. By understanding what the organization does well, what customers need, and what competitors are doing - both now and in the future - managers can create the best possible match between organizational skills and market needs - and to do it better than the competition. Once the Situation Analysis is complete and the key problems and opportunities have been identified, the value proposition - what value to offer and to whom - can be developed. Given what has been learned in the Situation Analysis, the fundamental activities in determining the value proposition are: 1) understand the needs of buyers in possible target markets; 2) identify segments of buyers with similar needs and/or responsiveness to marketing strategy and tactics; 3) select one or more segments of buyers to target; and 4) develop an appropriate positioning strategy. In conjunction with the development of the value proposition, the means of value delivery - how the organization will deliver on a given value proposition - must also be determined. It is generally recommended that you develop several alternative sets of marketing strategy and marketing mix tactics and then evaluate each one from both a qualitative and quantitative standpoint. Finally, select one of the alternative plans as the recommended course of action. Careful attention should be paid to how the plan will be implemented, how progress will be measured and evaluated, and how the plan might be adapted over time.
ic om cal on gi Ec olo Ec
Po Le litic ga al l
Suppliers
Company
Complements
Collaborators
Competitors
Potential Entrants
Value
Customers
Customers
The purpose of the Customer Analysis stage is to make explicit what you know about the nature of consumer or customer demand for the product or service under investigation. In particular, we want to learn: How decisions are made Who is involved in making the decision What information is used The trade-offs they are willing to make Where & when they are ready to buy How the product or service is used
Te ch
Capital
no lo gi ca l
m De
l ic cia ph So gra o
Market Segmentation What segments can be identified? What is their size, growth & potential?
Decision Making Unit (DMU) Who is involved? Who has power? Who has stake? How great is bargaining power? What information sources are used and how? Decision Making Process (DMP) How/when/where do buyers search, decide, purchase, transport, store, use, maintain, dispose, re-buy, etc What drives perceived value? What are customer acquisition & retention characteristics?
Competitors
For long-run success, marketing strategy and tactics must take into account likely competitive moves & counter-moves. Afterall, what we do affects what they do which affects what we do and so on. So, our strategy and tactics needs to take all players subsequent moves into account. The main goal of competitor analysis is to analyze the nature and extent of the competition - both current and potential. Key areas of analysis include: Identification Market definition o Who competes to provide the same benefits? o Who competes for the same customer resources (money, time, etc)? Direct competitors Indirect competitors and substitutes Potential competitors and entrants Assessment What are the competitors positions? o Goals o Strategy o Tactics o Resources o Implementation o Performance
Potential sources of information about competitors and collaborators are listed in Table 1 towards the end of this document.
Collaborators
Increasingly, competition is between networks, rather than individual organizations. Key issues to consider regarding collaborators include: Value Chain Position What is their position in the value chain? What functions/activities do they perform? Complementary Capabilities Who has capabilities that we need? Who would benefit from capabilities that we possess? Compatibility Are our goals compatible? Can we trust this partner? Commitment What level of commitment is required? What structure & systems are needed? What do we need to know/learn?
Context
The main purpose of analyzing the business environment is to understand the dynamics of the market place and what they imply for the decision at hand: PEST Analysis What are the most important PEST factors affecting our business? o Political/Legal e.g., NAFTA, WTO, Deregulation o Economic/Ecological e.g., Capital and Labor Markets, Asian Flu, Inflation, Interest Rates, Resource Sustainability o Social/Cultural e.g., Multi-Culturism, Global Diversity o Technological e.g., Shadow of Obsolescence, internet diffusion, life sciences How favorable are each of the above factors? Competitive Forces Analysis How favorable are the relevant competitive forces? o Bargaining power of suppliers o Bargaining power of buyers o Bargaining power of collaborators o Bargaining power of investors What is the degree of competitive rivalry? Scenario Analysis Which PEST and competitive forces factors are most likely to change? What are the most likely future scenarios? Which scenarios are the most favorable? The least?
Company
We analyze the organization's objectives, strategy, and capabilities, in order to evaluate the strength of the current business model and to identify areas for improvement and/or change. Importantly, we want to understand the implications of how well the organization fits with the critical parts of the external environment identified in our analysis of the customers, collaborators, competitors, and the PEST. Important areas of analysis include: Goals and Objectives What business is the firm in? What business should it be in? Who are the key stakeholders? What are their needs? What is the relative priority of these needs? What is the organizations stated mission? What are the stated goals and objectives for achieving the firms mission and/or satisfying stakeholders? Are these goals measurable? Actionable? Reasonable? Are supra-ordinate goals properly linked to subordinate ones? Position Marketing Strategy o Target segment o Positioning Marketing Mix o Product/Service o Place o Promotion o Pricing Resources Implementation Performance What metrics is the organization using to gauge performance? o Effectiveness o Efficiency o Supra-ordinate o Subordinate How effectively is the organization performing with respect to its stated goals? How efficiently is the organization achieving this level of performance?
TABLE 1
What competitors say about themselves Advertising Promotional materials Press releases Speeches Public Books Articles Personnel changes Want ads Customer communications Manuals Technical papers Licenses Trade Profession Patents Courses Seminars Security and Exchange Commission reports Government FTC filings Applications and permit filings Patent filings Annual meetings Annual reports Prospectuses Stock and bond issues
What others say about them Books Articles Case studies Consultants Newspaper reporters Environmental groups Consumer groups Unions Recruiting firms Suppliers/vendors Trade press Industry study Customers Subcontractors Consultants Lawsuits Antitrust State and federal agencies National plans Government programs Security analyst reports Industry studies Credit reports
Investors
Competitor A Direct, Indirect or Potential? Performance Success Factors Goals & Objectives Strategies & Tactics Strengths & Weaknesses Anticipated Moves/Reactions
Competitor B
Our Company
10
Importance
(e.g., Allocate 100pts)
Favorability
(e.g., 1=Low, 5=High)
Implications
Political/Legal Environment Economic/Ecological Environment Social/Demographic Environment Technological Environment Supplier Power Threat of Entry Capital Complements Overall Favorability
11
12
Overall Favorability
(Weighted Average)
13
Fit w/ Company Objective Target Segment(s) Positioning Product Place Promotion Price
Fit w/ Customers
Fit w/ Competition
Fit w/ Context
14
Importance
(e.g., Allocate 100pts)
Alternative I
Alternative II
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BIBLIOGRAPHY Bernhardt, Kenneth L. and Thomas C. Kinnear (1991), Cases In Marketing Management, 5th edition, Boston, MA: Irwin. Kotler, Philip (1999), Marketing Management: Analysis, Planning, Implementation, and Control, 10th edition, Englewood Cliffs, NJ: Prentice-Hall. Kotler, Philip, William Gregor and William Rogers (1977), The Marketing Audit Comes of Age, Sloan Management Review, 18:2, 25-43. Lilien, Gary, Philip Kotler and Sridhar Moorthy (1992), Marketing Models, Englewood Cliffs, NJ: PrenticeHall. Lehmann, Donald R. and Russell S. Winer (1994), Analysis for Marketing Planning, 3rd edition, Englewood Cliffs, NJ: Prentice-Hall. Nayak, P. Ranganath, Erica Drazen, and George Kastner (1992), The High-Performance Business: Accelerating Performance Improvement, Prism, 1st Quarter 1992, p. 1-20.
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