Tom Gillpatrick, Ph.D.
Juan Young Professor of Marketing & Executive Director, FILC
Master International Management Program
School of Business Administration
Portland State University
Fall 2004
MIM 515
10-Nov

• Market Research
• Competitor Analysis
• Colgate Case
• Samsung Case
• Case Analysis Discussion
• Quiz

Marketing research is the planning, collection, and analysis of data relevant to marketing decision making and the communication of the results of this analysis to management.

Market strategy
• Segmentation
• Profiling
• Market simulation
Corporate marketing
• Branding
• Image tracking
• Positioning
• Web site evaluation
Product marketing
• Packaging tests
• Naming
• Price/voluem estimation
• Advertising effectiveness
Channels
• Dealer programs
• Direct sales evaluation
• Win/loss studies
International Research Griggs-Anderson/Gartner Consulting

Product development
• Concept testing
• Feature valuation
• Consumer ethnographics
• Beta tests
Customer satisfaction
• Tracking studies
• Models
• Transaction monitoring

• Factors influencing a manager’s decision to use research information.
– Conformity to prior expectations.
– Clarity of presentation.
– Research quality.
– Political acceptability within the firm.
– Lack of challenge to the status quo.

Define the research problem
Check secondary sources
Determine primary research strategy
Estimate research cost
Design questionnaire
Define sample
Implement research design
Analyze data
Write report

The backward approach I advocate rests on the premise that the best way to design usable research is to start where the process usually ends and then work backward.
1. Determine how the research results will be implemented
(this helps to define the problem).
2. To ensure the implementation of the results, determine what the final report should contain and how it should look.
3. Specify the analyses necessary to fill in the blanks in the research report.

4. Determine the kind of data that must be assembled to carry out these analyses.
5. Scan the available secondary sources and/or syndicated services to see whether the specified data already exist or can be obtained quickly and cheaply from others. (While you are at it, you should observe how others have tried to meet data needs like your own.).
6. If no such easy way out presents itself, design instruments and a sampling plan that will yield the data to fit the analysis you have to undertake.

7. Carry out the field work, continually checking to see whether the data will meet your needs.
8. Do the analysis, write the report, and help management make it have its intended effects.
What else does this process do ?

Determine what key decisions are to be made using research results
Determine what information will help management make the best decisions
Prepare prototype report and ask management if this is what will best help them make their decisions
Determine the analysis that will be necessary to fill in the report
Determine what questions must be asked to provide the data required by the analysis
Ascertain whether the needed questions have been answered already

Design sample
Implement research design
Analyze data
Write report
Assist management to implement the results
Evaluate the research process and contribution

Advantages of Manager Participation in
Backward Research
1. It serves to co-opt managers into supporting the research work should it be criticized later by others.
2. It deepens their understanding of many of the details of the research itself and their appreciation of both its strengths and its weaknesses.
3. Working with hypothetical tables can make the manager eager for the findings when they do appear and ready to implement them.

Advantages of Manager Participation in
Backward Research
4. Working with contrasting tables makes it unlikely that the manager will be startled by surprising results, an outcome that sometimes causes a manager to reject an entire study.
5. Participation will also help reveal to management any limitations of the study. In my experience, managers are often tempted to go far beyond research “truth” when implementing the results, especially if the reported truth supports the course of action they prefer to take anyway.

+1
Relative Importance
Engineering
Perspective
0
Marketing
Perspective
-1
Price Display
Marketing people put more emphasis on price while engineering puts more perceived customer value in display.

• Current market demand
– Demand for our firm
– Demand for all competitive firms
• Potential demand
– Not aware
– Not available
– Unable to use
– Lacks benefits
– Not affordable

Company
Demand
Market
Demand

• Total market potential
• Area market potential
• Industry sales
• Market share

Product level
Space level
World
U.S.A.
Region
Territory
Customer
All sales
Industry sales
Company sales
Product line sales
Product form sales
Product item sales
Short run Medium run Long run
Time level

• Current factors
– Felt need
– Perceived risk
– Innovativeness
– Type of decision
• Product positioning
– Relative advantage
– Relative cost
– Relative complexity
– Ease of use
• Market influences
– Observability
– Trialability
– Marketing effort
• Faster growth
– High
– Low
– High
– Individual
– Attractive
– Low
– Minimal
– Easy
– Easily seen
– Easy to try
– Extensive

Internal Measures
• Unit Cost
• Mfg. Overhead
• Mktg. Expense
• R&D Expense
• Inventory Turn
• Sales/Employee
• Day’s Act.’s
Receivable
• ROS, ROI, ROE
• Asset Turnover
External Measures
• Market Share
• Relative Share
• Customer satisfaction
• Market Coverage
• Product awareness
• Relative quality
• Relative Price
• Customer Preferences
• Relative New Product
• Response Time

Market
Strategy
Market Mix
Strategy
Customer
Satisfaction
Net
Marketing
Contribution
Roger Best, 1997
Market-Based Mgt.

Strategies to
Grow Demand
Manage
Market Share
Grow Customer
Purchases
Net
Marketing =
Contribution
Market
Demand
X
Market
X
Share
Revenue Variable per - Cost per
Customer Customer
-
Marketing
Expense
Enter or Exit
Markets
Lower Variable
Cost per Customer
Increase
Marketing
Efficiency

What You Should Expect From A Competitor Analysis
•Which competitors does our strategy pit us against?
•What are competitor strengths and weaknesses?
(Core capabilities, ability to grow, ability to respond)
•What are your competitors strategies?
•What kind of counter moves will the competitor accept?
Which moves has it already countered?

Induce your competitors not to invest in those products, markets and services where you expect to invest the most … that is the fundamental rule of strategy.
Bruce Henderson, Founder of BCG
There is nothing more exhilarating than to be shot at without result.
Winston Churchill

Potential Entrants
(Threat of
Mobility)
Suppliers
(Supplier power)
Industry
Competitors
(Segment rivalry)
Buyers
(Buyer power)
Substitutes
(Threats of substitutes)

PORTER’S FIVE FORCES MODEL
Determinants of Supplier Power
Differentiation of Inputs:
Switching Costs:
Presence of substitute inputs:
Supplier concentration:
Importance of volume to supplier:
Cost relative to total purchases in the industry:
Impact of inputs on cost or differentiation:
Threat of forward vs. backward integration:
Entry Barriers
Economies of scale:
Proprietary product differences:
Brand identity:
Switching costs:
Capital requirements:
Access to distribution:
Absolute cost advantages:
Proprietary learning curve:
Access to necessary inputs:
Proprietary low-cost product design:
Government Policy:
Expected retaliation:
Rivalry Determinants
Industry growth:
Fixed costs/value added:
Intermittent overcapacity:
Product differences:
Brand identity:
Switching costs:
Concentration & balance:
Informational complexity:
Diversity of competitors:
Corporate stakes:
Exit barriers:
Competitive rivalry
Substitutes
Relative price/performance of substitutes:
Switching costs:
Buyer propensity to substitute
:
Determinants of Buyer Power
Buyer concentration vs. firm concentration:
Buyer volume:
Buyer switching costs vs. firm switching costs:
Buyer information:
Ability to backwards integrate:
Substitute products:
Pull through:
Price sensitivity:
Price/total purchases:
Product differences:
Brand identity:
Impact on quality/performance:
Buyer Profits:
Decision makers incentives :

• Competitive Environment
– Market Entry/exit
– Buyer/supplier power
– Substitutes/rivalry
• Competitive Position
– Competitor intelligence
– Competitor analysis
– Competitive benchmarking
• Competitive advantage
– Cost advantage
– Quality advantage
– Marketing advantage

• Cost Advantage
– Variable Costs
– Marketing Expenses
– Operating/Overhead Expenses
• Differential Advantage
– Product Differentiation
– Service Quality
– Brand Reputation
• Marketing Advantage
– Distribution
– Sales Effort
– Marketing Communications

Superior
Relative
Differentiation
Position
Differentiation
Advantage
Inferior
Stuck-in-the
Middle
Differentiation with Cost
Advantage
Low Cost
Advantage
Inferior Superior
Relative Cost Position

Pro Forma
Unit Volume
Niche Mainstream
Year 1
13,000
Year 2
20,000
Year 1
42,000
Year 2
59,000
Retail unit sales
Retail Dollar Sales
Professional unit sales
8,000 15,000 27,000 44,000
$16,160.00 $30,300.00 $47,520.00 $77,440.00
3,000 3,000 8,000 8,000
Professional Dollar Sales
Total Unit Sales
Total Dollar sales
$ 2,466.00 $ 2,466.00 $ 6,576.00 $ 6,576.00
11,000 18,000 35,000 52,000
$18,626.00 $32,766.00 $54,096.00 $84,016.00

Pro Forma
Manufacturing Costs
Sampling costs
Adv. & Promotion
Capacity Costs
Total Costs
Niche Mainstream
Year 1 Year 2 Year 1 Year 2
$ 7,260.00 $11,880.00 $22,400.00 $33,280.00
$ 1,320.00 $ 1,320.00 $ 4,480.00 $ 4,480.00
$11,200.00 $11,700.00 $32,800.00 $29,000.00
$ 317.00 $ 450.00 $ 887.00 $ 1,270.00
$18,777.00 $24,030.00 $56,087.00 $63,550.00

Niche Mainstream
Year 1 Year 2 Year 1 Year 2 Pro Forma
Operating Profits $ (151.00) $ 8,736.00 $ (1,991.00) $20,466.00
Profits as Percentage of
Sales
Cost of Cannibalization
Profit after cannibalization
-81% 26.66% -3.68% 24.36%
$ 2,298.00 $ 3,761.00 $ 12,537.00 $18,626.00
$ (2,449.00) $ 4,975.00 $ (14,527.00) $ 1,840.00

• To explore the evolution of a product category, demand for which is largely derived from usage of a related product.
• To review a new product development process and the importance of evaluating product company and product market fit in assessing NPD opportunities.
• To emphasize the importance and marketing program implications of determining whether a new product represents a big breakthrough idea or a line extension.
• To consider the relative merits of emphasizing a corporate brand umbrella vs. an individual brand names when launching a new product.

• To Illustrate the critical importance of effective marketing in achieving a corporate turnaround.
• To demonstrate the cross-border consumer research in guiding global brand repositioning.
• To explore the marketing planning and budgeting challenges typical of a multinational company (MNC) with a single global brand.
• To explore the responsibilities of a CMO in a major MNC.

• What is a case?
• What is purpose of case analysis?
• How to analyze a case?
• How to write a case?
• How to discuss a case?
• Questions?

• Format- 5 pages
– Executive summary- 1 page
– Analysis
– Conclusion
– Attachments/Appendix (optional)

• Introduction:
– Overview of key issues
– Decision Context
• Problem Statement
– What are key managerial problems
– Use question format, prioritize
– Focus- underlying problem Vs. symptom
• Recommendations
– Do they address problem(s)

• What is analysis?
– Critical breaking apart data/facts and processing to add meaning
– Can be quantitative or qualitative
– Developing structure to convey meaning- eg. pro/con analysis, model
• What is NOT analysis?
– Restating case facts
– listing solutions

• Link to key problems.
• What are implications for action?
• Do not confound with analysis section.
• Is there a theme?
• Are recommendations supported by analysis? Do they flow from analysis?

• Do you have any graphs charts that support analysis?- (label, reference)
• Calculations that are too detailed for body of paper
• Assumptions that you feel are necessary to support analysis

Research Overview: Key Questions
• What is the target industry?
• What is the industry overview?
• What are the industry norms?
• Who are the key players?
• What is the size of the market & market share?
• What are the forecasts and trends?

• Internet:
– SIC Manual Online: http://www.osha.gov/oshstats/sicser.html
– NAICS & SIC Correspondence Tables: http://www.census.gov/epcd/www/naicstab.htm
• Paper
(behind Business Reference Desk)
– SIC Manual:
HF1042 .U58 1987
– North American Industry Classification System
(NAICS): HF1042 .N67 1998

• Internet
– Hoovers: http://www.hoovers.com/industry/resources.html
– Current Industrial Reports: http://www.census.gov/cir/www/index.html
– VIKAT: http://www.lib.pdx.edu/netwk/sirsi.html
• Paper
(Basement)
– Moody’s Industry Review: Reference HG4961.M68
– Standard and Poor’s Industry Surveys: Reference
HG4905.S66
– Manufacturing USA: Reference HD9721 .M364

• PSU Databases:
– ABI Inform
– Lexis - Nexis
– Investext
• Paper:
(behind Business Reference Desk)
– Almanac of Business and Industrial Financial
Ratios: HF5681 .R25 T68
– Industry Norms and Key Business Ratios:
HD9724 .I514

• Internet
– Forbes Annual Report on American Industry: http://www.forbes.com/
• PSU Databases
– http://www.lib.pdx.edu/netwk/databases.html
– Disclosure Global Access (sort by SIC)
• Paper CorpTech Directory of Technology
Companies: Reference T12 .C82

• PSU Databases
– http://www.lib.pdx.edu/netwk/databases.html
– ABI Inform
– Lexis - Nexis
– Investext
• Paper
(behind Business Reference Desk)
– Market Share Reporter:
HF5410 .M35
– U.S. Industry and Trade Outlook
: HC106.5 .A17

• PSU Databases
– http://www.lib.pdx.edu/netwk/databases.html
– Investext
– Lexis - Nexis
– ABI Inform
• Paper
– U.S. Industry and Trade Outlook:
HC106.5.A17 (behind
Business Reference Desk)
– Standard & Poor’s Industry Surveys:
Reference HG4905.S66

1. C6-n6
2. C6-n10
3. C6-n12, part two use Costco ( rather than Sears & K Mart)
4. C7-n1
5. C7-n11
6. Briefly apply Ch:4 GM to Samsung case relative to benefits and challenges of global branding