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Strategic Market Management

Global Perspectives

David A. Aaker and Damien McLoughlin


ISBN: 978-0-470-68975-2
www.wileyeurope.com/college/aaker

© Copyright 2010 John Wiley & Sons Ltd


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Chapter Two

External and Customer Analysis

© Copyright 2010 John Wiley & Sons Ltd


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“The purpose of an enterprise is to create and
keep a customer.”

Theodore Levitt
“You can’t just ask customers what they want and
then try to give that to them. By the time you get it
built, they’ll want something new.”

Steve Jobs
“Without a specific reason for the consumer to
behave, without a reward or benefit, the
overwhelmed consumer will refuse.”

Seth Godin
The Role of External Analysis
Strategic Decisions
• Where to compete
• How to compete
External
Analysis

Identification
• Trends/future events Analysis
• Threats/opportunities • Information-need areas
• Strategic uncertainties • Scenario analysis

Figure 2.1

Figure 3.1
Strategic Uncertainties
Strategic Uncertainties Strategic Decisions

 Will a major firm enter?  Investment in a product market


 Will a tofu-based dessert  Investment in a tofu-based product
product be accepted?  Investment in a technology
 Will a technology be
replaced?  Commitment to off-shore
manufacturing
 Will the Euro strengthen
against other currencies?  Investment in a new system
 Will computer-based
operations be feasible with  A strategy of maintaining price parity
current technology?
 How sensitive is the market
to price?
Strategic Uncertainties
 You arein the automove  You are in the
manufacturing business! cosmetics business.
 What may be the strategic  What may be the
uncertanities? strategic uncertanities?

© Copyright 2010 John Wiley & Sons Ltd


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Strategic uncertanity!

Toyota is unlikely to introduce another new car with a diesel


engine, the company’s boss has told Auto Express
Toyota has made such extensive gains with petrol-based hybrid
and plug-in hybrid vehicles over the past decade that it will
soon decide never to launch another new car with a diesel
engine, Auto Express can reveal.

© Copyright 2010 John Wiley & Sons Ltd


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 The uncertainty could be modelled by a scenario
analysis.
 A scenario is an alternative view of the future
environment that is usually prompted by an
alternative possible answer to a strategic
uncertainty or by a prospective future event or
trend.

© Copyright 2010 John Wiley & Sons Ltd


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Strategic Uncertainties

• Performance improvements?

What will the • Competitive technological


developments?
future demand?
• Financial capacity of health care
industry?

The strategist is challenged to look at strategy from the perspectives


of customers, competitors, market and environment as well as from
an internal perspective.
When should an external
analysis be conducted?
 Annually?
 It may be productive to focus on a part of the
analysis in the years immediately following a
major effort.
 Printing test books?

© Copyright 2010 John Wiley & Sons Ltd


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Customer Analysis
 Segmentation (the identification of customer groups that
respond differently from other groups to competitive
offerings) (The objective is to conceptualize, develop and
evaluate targeted competitive offerings)

– Who are the biggest customers? The most profitable? The


most attractive potential customers? Do the customers
fall into any logical groups based on needs, motivations,
or characteristics?

– How could the market be segmented into groups that


would require a unique business strategy?

Figure 3.2
Segmentation variables
 Customer  Product related
characteristics: approaches:
 Geographic,  User type
 Type of org.  Usage
 Size of org.  Benefit sought
 Lifestyle  Price sensitivity (A101)
 Sex  Competitor
 Age  Application
 Occupation  Brand loyalty
© Copyright 2010 John Wiley & Sons Ltd
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Benefit based segmentation

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Age distribution in some countries

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Turkey

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Customer Analysis
 Customer Motivations

– What elements of the product/service do customers value most?

– What are the customers’ objectives? What are they really buying?

– How do segments differ in their motivation priorities?

– What changes are occurring in customer motivation? In customer


priorities?

Figure 3.2
Customer Analysis
 Unmet Needs
– Why are some customers dissatisfied? Why are some changing brands or
suppliers?

– What are the severity and incidence of consumer problems?

– What are the unmet needs that customers can identify? Are there some of
which consumers are unaware?

– Do these unmet needs represent leverage points for competitors?

Figure 3.2
Segmentation
 How should segments be defined?

– Benefit Segmentation

– Price Sensitivity

– Loyalty

– Applications

– Multiple Segments versus Focus Strategy


Examples of Approaches to
Defining Segments
 Customer Characteristics
– Geographic
– Type of organisation
– Size of firm
– Lifestyle
– Sex
– Age
– Occupation

Figure 3.3
Examples of Approaches to
Defining Segments
 Product-Related Approaches
– User type
– Usage
– Benefits sought
– Price sensitivity
– Competitor
– Application
– Brand loyalty

Figure 3.3
The Loyalty Matrix: Priorities

Low Moderate Loyal


Loyalty Loyalty

Customer Medium High Highest

Low
Non-customer to High Zero
Medium
Figure 2.4

Figure 3.4
Customer Motivation Analysis

Identify
Motivations
Group and
Structure
Motivations
Assess
Motivation
Importance
Figure 2.6
Assign Strategic
Roles to Motivations
Figure 3.6
The Customer as Active Partner
 Encourage Active Dialogue

 Mobilize Customer Communities

 Manage Customer Diversity

 Co-creating Personalised Experiences


Key Learnings
 External analysis should influence strategy by identifying opportunities,
threats, trends, and strategic uncertainties. The ultimate goal is to improve
strategic choices – decisions as to where and how to compete.

 Segmentation (identifying customer groups that can support different


competitive strategies) can be based on a variety of customer characteristics,
such as benefits sought, customer loyalty, and applications.

 Customer motivation analysis can provide insights into what assets and
competencies are needed to compete, as well as indicate possible SCAs.

 Unmet needs that represent opportunities (or threats) can be identified by


projecting technologies, by accessing lead users, by ethnographic research, and
by interacting with customers.
Ancillary Slides
“All business success rests on something labeled a
sale, which at least momentarily weds a
company and customer.”

Tom Peters

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