Session 2
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Situation Analysis
Customer Analysis
Marketing Research
Understanding and Analyzing Markets
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Political
- includes (L)egal, (E)nvironmental
law/policy
Economic
- includes (E)nvironmental climate and
weather
Social/Cultural
- includes (D)emographic, (E)thical,
(E)ducational, (E)nvironmental attitudes
Technological
P
E
S
T
And many variants…
PEEST
PESTEL
PESTLE
SLEPT
STEEPLED
PEST LIED
Where PEST fits in
Environmental Scan
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External Analysis
/
Internal Analysis
\
Macroenvironment Microenvironment
|
PEST
Political - Legal
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Tax policy
Employment laws
Environmental regulations
Consumer protection
Special interest groups
Government trade restriction and support
Licensing requirements
Political Stability
Economic
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Income levels and PPP
Economic growth rates and Business cycles
Inflation rate
Price levels
Consumer confidence
Savings rate
Debt and credit availability
Exchange rates
Sociocultural
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Social values (Others, Environment, Health)
Trends and Fads
Demographics
Education
Class structure and mobility
Household patterns
Religion
Technological
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Rate of technological adoption and change
Infrastructure
ICT level
Cost of energy
R&D activity
Supply chain efficiency
Automation
Where 5 Forces fits in
Environmental Scan
/
\
External Analysis
/
Internal Analysis
\
Macroenvironment Microenvironment
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PEST
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Five Forces
Industry Analysis
Threat of New Entrants
Barriers to entry
1.
Supply-side economies of scale (Intel)
2.
Demand-side economies of scale (ebay)
3.
Customer Switching costs (SAP software)
4.
Capital requirements
5.
Incumbency advantages regardless of size
6.
Unequal access to distribution channels
7.
Restrictive government policies
Power of Suppliers
Power increases if:
 Is more concentrated than the industry it sells to
(Microsoft)
 Supplier group does not depend heavily on the
industry for its profits
 Switching costs are high (Bloomberg terminals)
 Suppliers offer differentiated products (Drugs)
 Suppliers can threaten to forward integrate
Power of Buyers
Power increases if:
 Few buyers and larger purchase volumes
 Industry products are standardized
 Buyers face few switching costs
 Buyers can threaten to integrate backward
Power of Buyers (2)
Price sensitivity is found when:
 Purchased product is a significant percentage of
procurement
 Buyers earn low profits
 Quality of buyers product isn’t influenced by
industries product
 Industry product has little effect on buyer’s other
costs
Threat of Substitutes


It offers an attractive price-performance trade-off
Cost of switching is low
Rivalry Among Competitors
Rivalry is greatest when:
 Competitors are numersous or are roughly the same
size
 Industry growth is slow
 Exit barriers are high
 Rivals are highly committed to business and have
leadership aspirations
 Firms cannot read each others signals
Rivalry Among Competitors (2)
Price competition most likely if:
 Products or services are nearly identical and there
are few switching costs
 Fixed costs are high and marginal costs low
 Capacity must be expanded in large increments to
be efficient
 Product is perishable
Industry Analysis (1)
• What products
• Which are also in
another
• Geographic scope
Define the relevant
industry
Identify the
participants and
group them
•
•
•
•
•
Buyers
Suppliers
Competitors
Substitutes
Potential entrants
• Which forces are
strong / weak
• Why
Assess the
underlying drivers
Industry Analysis (2)
• Why is level of
profit what it is
• Which forces
control profit
• Are moreprofitable players
better positioned
Determine overall
industry structure
Analyze recent and
likely changes in
each force
• Positive and
Negative
• By competitors
• By new entrants
• By your company
Identify aspects
of industry
structure that
might be
influenced
Pitfalls
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Defining the industry too broadly or narrowly
Making lists instead of rigorous analysis
Paying equal attention to all forces
Confusing cyclical changes with structural changes
Using the analysis to declare an industry attractive
or unattractive rather than to guide strategic choices
Where SWOT fits in
OT
Environmental Scan
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External Analysis
/
Internal Analysis
\
Macroenvironment Microenvironment
|
PEST
SW
|
Five Forces
SWOT
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Summary for strategic purpose
Clearly focused on a business objective
Specific, unique, and detailed
Complete ideas = multiple sentences
 NOT
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
single words
Limited = two or three points in each area
Organized = most important first (can be weighted)
SW = internal / OT = External
Perform a SWOT analysis on Highly Brill Leisure Center, based upon the following issues:
1.
2.
The Center is located within a two-minute walk of the main bus station, and is a fifteen-minute
ride away from the local railway station.
There is a competition standard swimming pool; although it has no wave machines or whirlpool
equipment as do competing local facilities.
3.
It is located next to one of the largest shopping centers in Britain.
4.
It is one of the oldest centers in the area and needs some cosmetic attention.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Due to an increase in disposable income over the last six years, local residents have more money
to spend on leisure activities.
There has been a substantial decrease in the birth rate over the last ten years.
In general people are living longer and there are more local residents aged over fifty-five now
than ever before.
After a heated argument with the manager of a competing leisure center, the leader of a
respected local scuba club is looking for a new venue.
The local authority is considering privatizing all local leisure centers by the year 2000.
Press releases have just been issued to confirm that Highly Brill Leisure Center is the first center in
the area to be awarded quality assurance standard BS EN ISO 9002.
A private joke between staff states that if you want a day-off from work that you should order a
curry from the Center's canteen, which has never made a profit.
The Center has been offered the latest sporting craze.
Highly Brill Leisure Center has received a grant to fit special ramps and changing rooms to
accommodate the local disabled.
It is widely acknowledged that Highly Brill has the best-trained and most respected staff of all of
the centres in the locality.
Dada Sky
Background

Vijay Shivalingu is the Marketing Director for Dada Sky Inc, based in Western
India. He is beginning his marketing plan which will form the basis of a new
and exciting satellite based digital TV and Internet experience.
Personal experience.

Vijay has many years experience in the motor industry, and in fact began his
career at Dada Motors Inc after graduating from university with a degree in
engineering. He has no formal marketing qualifications, but has lots of valuable
real-world experience.
Strengths.
 Dada has one of three new 25 -year government licenses to supply
satellite services across India.
 Dada will be the first to launch its new services in the summer. Dada is a
well-known brand in India for cars. It is not renowned for its technology
brands.
Weaknesses.
 The company is 3 months behind schedule with its launch programme.
Opportunities.
 Huge expansion of TV and Internet access in India. The expansion is
growing by 100% per annum. The potential value of such a business could
be huge.
 Education will soon be delivered to remote Indian villages via the Internet
and laptops. This is a government funded programme worth $1 billion US.
Threats.
 A large European competitor brand has also entered the market.
 A large Australian competitor brand has announced a joint-venture with a
national terrestrial TV Indian brand.
Strengths.
 Dada has one of three new 25 -year government licenses to supply
satellite services across India.
 Dada will be the first to launch its new services in the summer. Dada is a
well-known brand in India for cars. It is not renowned for its technology
brands.
Strengths. REV
 Dada will be the first to launch its new services in the summer. Being first to
market will help it to land grab early customers. Competitors will need to
work hard to get them to swap brands especially if they are satisfied with
Dada's offering. 75%
 Dada has one of three new 25 -year government licenses to supply
satellite service across India. It is the only Indian national company to win
this prestigious contract and this fact will undoubtedly help the company
attract important early adopters keen to support their flag carrier brand.
25%
Weaknesses.
 The company is 3 months behind schedule with its launch programme.
Weaknesses. REV
 Dada is a well-known brand in India for cars. It is not renowned for its
technology brands. A rebranding exercise needs to be undertaken. It
should emphasize the innovative nature of the brand. A large investment
must be considered here. 60%
 Dada is a well-known brand in India for industrial products. The company is
3 months behind schedule with its launch programme. This could mean that
a competitor could launch before Dada. 40%
Opportunities.
 Huge expansion of TV and Internet access in India. The expansion is
growing by 100% per annum. The potential value of such a business could
be huge.
 Education will soon be delivered to remote Indian villages via the Internet
and laptops. This is a government funded programme worth $1 billion US.
Opportunities. REV
 Huge expansion of TV and Internet access in India. The expansion is
growing by 100% per annum. The potential value of such a business could
be huge. Services will include telephone, mobile devices, pay-per-view TV,
all sorts of channels supplying services such as Bollywood movies to Test
Cricket. 80%
 Education will soon be delivered to remote Indian villages via the Internet
and laptops. This is a government funded programme worth $1 billion US.
This opportunity will see regular income from the winning provider. As the
national brand, this is vital business for Dada. 20%
Threats.
 A large European competitor brand has also entered the market.
 A large Australian competitor brand has announced a joint-venture with a
national terrestrial TV Indian brand.
Threats. REV
 A large Australian competitor brand has announced a joint-venture with a
national terrestrial TV Indian brand. The Indian TV brand is the most
popular independent TV company in the country. This will help the
consortium to seamlessly enter the market. 60%
 A large European competitor brand has also entered the market. The
company has years of international satellite experience and can build upon
the synergy with its expanding British business. 40%
Developing the research plan

Data Sources
 Primary
 Secondary
Developing the research plan

Approaches
 Observational
 Focus
group
 Survey
 Behavioral Data
 Experimental
 Technological
 Questionnaire
Question types – importance scale
Airline food service is _____ to me.
 Extremely important
 Very important
 Somewhat important
 Not very important
 Not at all important
Question types – rating scale
Virgin Atlantic’s food service is _____.
 Excellent
 Very good
 Good
 Fair
 Poor
Question types –
intention to buy scale
How likely are you to purchase tickets on Virgin
Atlantic if in-flight Internet access were available?
 Definitely buy
 Probably buy
 Not sure
 Probably not buy
 Definitely not buy
Question types –
completely unstructured
What is your opinion of Virgin Atlantic?
Question types –
word association
What is the first word that comes to your mind when
you hear the following?
Airline ________________________
British _____________________
Travel ________________________
Question types –
sentence completion
When I choose an airline, the most important
consideration in my decision is:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
______________________________.
Question types –
story completion
‘I flew Virgin a few days ago. I noticed that the exterior
and interior of the plane had very bright colors. This
aroused in me the following thoughts and feelings’.
Now complete the story.
____________________________________________
____________________________________________
____________________________________________
____________________________________________
____________________________________________
______________
Question types –
picture (empty balloons)
Qualitative measures
Word association
Projective techniques
Visualization
Brand personification
Laddering
Technological devices
Galvanometers
Tachistoscope
Eye cameras
Audiometers
GPS
Sampling plan
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Sampling unit: Who is to be surveyed?
Sample size: How many people should be surveyed?
Sampling procedure: How should the respondents
be chosen?
Types of samples
Table 6.2
Probability and non-probability samples
Contact methods
Mail questionnaire
Telephone
interview
Personal
interview
Online
interview
Pros and cons of online research
Advantages
 Inexpensive
 Fast
 Accuracy of data,
even for sensitive
questions
 Versatility
Disadvantages
 Small samples
 Skewed samples
 Technological
problems
 Inconsistencies
Characteristics of
good marketing research
1)
Scientific method
2)
Research creativity
3)
4)
Multiple methods
Interdependence of
models and data
5) Value and cost of
information
6) Healthy scepticism
7) Ethical marketing
Barriers to the use of
marketing research
Uneven calibre
of researchers
Narrow conception
of research
Poor framing
of the problem
Late and occasionally
erroneous findings
Personality and
presentational differences