Tom Gillpatrick, Ph.D. Juan Young Professor of Marketing & Executive Director, FILC

1. Global Marketing 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

2. Agenda • Market Research • Competitor Analysis • Colgate Case • Samsung Case • Case Analysis Discussion • Quiz

3. Marketing Research Defined 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.

4. 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 Market Research Examples International Research Griggs-Anderson/Gartner Consulting

5. Product development Concept testing Feature valuation Consumer ethno-graphics Beta tests Customer satisfaction Tracking studies Models Transaction monitoring Market Research Examples

6. Managing the Research Process • 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.

7. 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 Forward Research Design

8. Turning the Process on Its Head 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. • Determine how the research results will be implemented (this helps to define the problem). • To ensure the implementation of the results, determine what the final report should contain and how it should look. • Specify the analyses necessary to fill in the blanks in the research report.

9. Turning the Process on Its Head • Determine the kind of data that must be assembled to carry out these analyses. • 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.). • 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.

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

11. Backward Research Design 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

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

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

14. Advantages of Manager Participation in Backward Research • 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. • 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.

15. What’s Important Depends on Your Perspective Relative Importance +1 Engineering Perspective 0 Marketing Perspective -1 Price Display Marketing people put more emphasis on price while engineering puts more perceived customer value in display.

16. Estimating Market Potential • 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

17. Company Demand Market Demand Demand

18. Estimating Current Demand • Total market potential • Area market potential • Industry sales • Market share

19. World Space level U.S.A. Region Territory Customer All sales Industry sales Product level Company sales Product line sales Product form sales Product item sales Short run Medium run Long run Time level Ninety Types of Demand Measurement (6 X 5 X 3)

20. 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 Factors Driving Market Growth

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

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

23. Fundamental Market-Based Strategies & Profit Growth Grow Customer Purchases Strategies to Grow Demand Manage Market Share Net Marketing Contribution Revenue Variable per - Cost per Customer Customer Market Demand Market Share Marketing Expense = X X - Increase Marketing Efficiency Enter or Exit Markets Lower Variable Cost per Customer

24. COMPETITOR ANALYSIS • 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?

25. 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

26. Potential Entrants (Threat of Mobility) Suppliers (Supplier power) Industry Competitors (Segment rivalry) Buyers (Buyer power) Substitutes (Threats of substitutes) Five Forces Determining Segment Structural Attractiveness

27. 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: 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: 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: Price sensitivity: Price/total purchases: Product differences: Brand identity: Impact on quality/performance: Buyer Profits: Decision makers incentives: Competitive rivalry Substitutes Relative price/performance of substitutes: Switching costs: Buyer propensity to substitute:

28. Competitor Analysis & Competitive Positioning • 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

29. Competitive Position & Competitive 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

30. Developing Competitive Advantage Superior Differentiation with Cost Advantage Differentiation Advantage Relative Differentiation Position Stuck-in-the Middle Low Cost Advantage Inferior Inferior Superior Relative Cost Position

35. Objectives Colgate Case • 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.

38. Samsung Case • 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.

39. Summary for Case Analysis • 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?

40. Written Case Analysis MIM 515 • Format- 5 pages • Executive summary- 1 page • Analysis • Conclusion • Attachments/Appendix (optional)

41. Executive Summary • 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)

42. Case Analysis • 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

43. Recommendations • 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?

44. Appendix-Examples • 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

45. Industry Research

46. 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?

47. What is the target industry? • 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

48. What is the industry overview? • 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: ReferenceHD9721 .M364

49. What are the industry norms? • 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

50. Who are the key players? • 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: ReferenceT12 .C82