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Defining the Opportunity

Defining the Opportunity. Douglas Amyx , Ph.D. College of Business Louisiana Tech. Question:. How do we know if we have a worth while product or service?. Answer:.

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Defining the Opportunity

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  1. Defining the Opportunity Douglas Amyx, Ph.D. College of Business Louisiana Tech

  2. Question: How do we know if we have a worth while product or service?

  3. Answer: • By asking our customers. Our focus must be on the customer – i.e., a Market Orientation. Market research, the process of collecting, analyzing, and reporting findings relevant to a marketing situation, facilitates a market orientation.

  4. Primary Research Data • Data collected specifically for the research problem under investigation. Provides the advantage of addressing the issue of concern. Its major disadvantage is that it tends to be costly, time consuming, and includes extensive planning.

  5. Secondary Research Data • Data collected for some other purpose but can be used for the problem at hand (e.g., Census data). It offers the advantage of being less expensive than primary data but is not always available for strategy-specific research questions.

  6. Market Research Answers the questions: • Who will buy? • What will they buy? • Why will they buy? • Where are the customers? • When will the customers buy? • How many customers are there?

  7. Assess Your Market Viability • Verify the general viability of your product, market, financing, and technology through credible sources…again, that means objective research, not just a subjective opinion. • Empirical data (primary or secondary) is necessary (e.g., sales data, economic reports, industry facts, observed purchase patterns, etc.)

  8. Scales of Measurement • Nominal – identity (e.g. male/female) • Ordinal – order (e.g. preference for brands) • Interval – comparison of intervals (e.g. attitude toward brands) • Ratio – comparison of absolute magnitudes (e.g. probability of purchase)

  9. Sample Nominal Scale • These scales help answer the question of who will/will not buy by identifying basic information in a survey. • Gender: Male__ Female __ • Age: 18-29__ 30-45__ 46+__ • Marital Status: single__ married__

  10. Ordinal • Help identify order preferences among choices. • e.g., Please rank order your preferences of the following competing brands from favorite to least favorite. Coke Pepsi Dr. Pepper

  11. Sample Interval (Likert) Scale Strongly Neutral Strongly Disagree Agree The bank offers Courteous service __ __ __ __ __ 1 2 3 4 5

  12. Sample Ratio Scales How Likely are you to purchase brand X? 0-100%______ In what quantity do you expect to purchase brand X? ______

  13. Qualitative Measures • Open ended questions: Why did you buy that brand? • Observation of consumers in natural setting • Focus groups • In-depth interviews • Projective techniques • Thematic Apperception Test T.A.T.

  14. Feel the Customer’s Pain • Its all about the customer…understand his/her unmet needs (pain) and create a product or service that meets the need (resolves the pain). Do not focus on the product/service…Do focus on the benefit(s) to the customer. Use Marketing to sell the benefit.

  15. What is Marketing? • Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. (American Marketing Association 2004)

  16. Create a Unique Value Proposition • Create a value offering for your customers with unique and meaningful benefits. Avoid becoming a commodity. • For Example, what do Nike, Fed Ex, & Toyota offer?

  17. Nike offers advanced ergonomic designs

  18. FedEx offers time & place utility FedEx creates a uniquevalueproposition with Sunday deliveries based on customer requests and market demand

  19. Toyota offers reliability

  20. Define The Opportunity • Assess Market Opportunities based on your business concept • Understand Megatrends • Examine the forces that affect the business environment • Evaluate competitors • Evaluate yourself & your strategy

  21. Assess Market Opportunity • Examine the market conditions to determine if a viable market opportunity exists for your product or service idea.

  22. Market Opportunity Analysis (MOA) • Can the benefits involved in the opportunity be articulated convincingly to a defined target market? • Can the target market be located and reached with cost-effective media and trade channels? • Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?

  23. Market Opportunity Analysis (MOA)_2 • Can the company deliver the benefits better than any actual or potential competitors? • Will the financial rate of return meet or exceed the company’s required threshold for investment?

  24. Business Opportunity Analysis • Fads • Trends • Megatrends

  25. 10 Megatrends Shaping the Consumer Landscape • Increased immigration • Rising Hispanic influence • Shifting birth trends • Widening geographic differences • Changing age structure • Aging boomers • Delayed retirement • Changing nature of work • Greater educational attainment • Labor shortages

  26. Business Environmental Forces • Economic • Natural • Technological • Political-Legal

  27. Economic Forces • Purchasing Power • Income distribution • Savings Rate • Debt • Credit Availability

  28. Natural Forces • Shortage of raw materials • Increased energy costs • Anti-pollution pressure • Governmental protection

  29. Technological Forces • Pace of change • Innovation opportunities • Increased regulation

  30. Political-Legal Forces • Increased business legislation • Special interest group growth

  31. Analyzing Competitors Market Share/Customer Loyalty . Competitive Advantage(s) Weaknesses

  32. Competitive Forces Assessment

  33. SWOT Analysis . Strengths Weaknesses Opportunities Threats

  34. Evaluate Your Strategy • Create the building blocks of Marketing Strategy (your plan of action). The basic pieces of any successful Marketing Strategy must include: • Market Segmentation • Target Marketing • Positioning

  35. Market Segmentation Defined • The process of dividing a heterogenous group into smaller, homogeneous clusters or segments who contain people with similar needs within each segment and significant, meaningful differences between each of the segments.

  36. Major Markets • Consumer markets • Business markets

  37. Ways to Segment Consumer Markets Geographic . Demographic Psychographic Behavioral

  38. Demographic Segmentation . Age and Life Cycle Life Stage Gender Income Generation Social Class

  39. PRIZM Data

  40. Characteristics of Business Markets • Close supplier-customer relationships • Professional purchasing • Many buying influences • Fewer, larger buyers • Multiple sales calls • Inelastic demand • Geographically concentrated buyers • Direct purchasing

  41. Target Marketing • The process of identifying a specific group of customers who have unique, identifiable needs, have the authority, ability, and desire to make an exchange with.

  42. Positioning • The art & science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competition. Positioning affects how customers perceive your company and its products, and perception is reality!

  43. Positioning approaches • Perception must be managed, and can be based on any of the following: • Product attributes – Apple first stressed ease of use • Price/Quality – Rolex, expensive but worth it • Application – Arm & Hammer baking soda has many uses • Product Class – Amtrak vs. planes, CDs vs. MP3 • Product User - Valvoline appeals to car enthusiasts • Competitor - Avis “tries harder,” Coke vs. Pepsi • Cultural Symbol - Ronald McDonald, Jolly Green Giant

  44. Competitive Advantage Strategies . Overall Cost Leadership Differentiation Focus

  45. Differentiation • Where product or service is perceived as unique or better than competitors’. • Value may be added through differentiation. • E.g., Frank Purdue’s Chicken

  46. Differentiation Strategies . Product Personnel Channel Image

  47. Product Differentiation • Product form Style • Design Features • Performance Conformance • Delivery Durability • Ordering ease Reliability • Installation Maintenance • Customer training Customer Consulting

  48. Personnel Differentiation: Singapore Airlines

  49. Channel Differentiation

  50. Image Differentiation

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