WHAT ARE ATTRACTIVE OPPORTUNITIES?

Are those that a firm has some chance of doing something about, given its resources and objectives.

Need to find breakthrough opportunities and develop competitive advantage via the 4 P’s (product, place, price, and promotion).

TYPES OF OPPORTUNITIES TO PURSUE

• Market Penetration

Present products in present markets via 4 P’s
 
• Market Development

Present products in new markets via 4 P’s
 
• Product Development

New products in present markets via 4 P’s.
 
• Diversification

Totally different lines. New products in new markets via 4 P’s.

Lower prices can lead to a competitive advantage

Foreign countries are at different stages of development and market needs.
 

SEARCH FOR OPPORTUNITIES CAN BEGIN BY UNDERSTANDING MARKETS

Market is group of buyers with similar needs who are willing to exchange something of value Two types of markets: Generic -- broadly similar needs/diverse substitutes; Product Market -- very similar needs/close substitutes
 

NAMING PRODUCT MARKETS AND GENERIC MARKETS

Product definition is four part:

1. What (description, type of good)
2. To meet what (user’s basic and emotional needs)
3. For Whom (customer types)
4. Where (geographic area)

Two step process:

1. Name broad target markets
2. Segment, then develop marketing mix (4 P’s)

Segmented market is a homogenous group of customers who will respond to a mix in a similar way.

Criteria for segmenting broad product market

1. Homogenous (within)
2. Heterogeneous (between)
3. Substantial (segments should be large enough to be profitable)
4. Operational (segmenting dimensions should be useful for identifying target markets)

1. Single target market
2. Multiple target market
3. Combination of the above

WHAT DIMENSIONS ARE USED TO SEGMENT MARKETS?

Possible segmenting dimensions:

Consumer markets, Exhibit 3-10

• Behavioral
• Geographic
• Demographic

• Kind of relationship
• Type of customer
• Demographics
• How product is used
• Type of buying situation
• Purchasing method

1) All potential dimensions

2) Qualifying dimensions

3) Determining dimensions -- Product type

4) Determining dimensions -- Brand specific
 

MORE SOPHISTICATED TECHNIQUES

Can use clustering techniques combined with customer data bases to find similar patterns within sets of data

See Exhibit 3-13

MARKETING ENVIRONMENT (2)

Direct Market Environment

• Company
• Customer
•  Competitive

• Economic
• Technological
• Political and legal environment
• Cultural and social environment

Three basic guidelines for objectives

1. Must serve socially and economically useful function
2. Must carry on the business
3. Must provide enough profit to survive

THE COMPETITIVE ENVIRONMENT

Must conduct competitor analysis to evaluate the strengths and weaknesses of current and potential competitors’ marketing strategies.

See exhibit 4-2
 

THE ECONOMIC ENVIRONMENT

Affects the way the firm and the whole economy uses resources. It includes interest rates, inflation, and the economies of other countries, etc.
 

THE TECHNOLOGICAL ENVIRONMENT

Involves the technical skills and equipment used to convert resources into output. The pace is rapid and whole new industries can be created.

Ethics: Firms must decide what technical advancements are ethically acceptable.
 

THE POLITICAL ENVIRONMENT

Nationalism can be strong. For example “Buy America”

Unification of the European markets has its own trade rules and restrictions on markets.

NAFTA has caused tariffs to drop, resulting in significant impacts on businesses.

Consumerism has increased the rights and powers of consumers.
 

THE LEGAL ENVIRONMENT

See exhibit 4-3

“Let the buyer beware”
 

THE CULTURAL AND SOCIAL ENVIRONMENT

Woman's role is no longer “in the home”
 

PLANNING GRIDS HELP EVALUATE A PORTFOLIO OF OPPORTUNITIES

Very important!!! See exhibit 4-7, GE’s Planning Grid.