Ch. 2 Market Insight

Transcription

1 Chapter 2. Ch. 2 Market Insight Disclaimer: All images such as logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used here for educational purposes only Some material adapted from: Sorger, Stephan. Marketing Analytics: Strategic Models and Metrics. Admiral Press Stephan Sorger 2016; Ch. 2 Market Insight; 1

2 Stephan Sorger 2016; Ch. 2 Market Insight; 2 Outline/ Learning Objectives Topic Description Terminology Data Sources Sizing Trends Know the difference between markets and products Assemble your go-to list of data sources Practice sizing with reports, top-down, and bottom-up Find trends using PESTLE & Porter 5 Forces techniques

3 Stephan Sorger 2016; Ch. 2 Market Insight; 3 Market Description Topic Description Market Description Describe market based on need that product fulfills Avoid overly narrow (product-based) descriptions Example: Wang word processors in 1980s Market Groups of customers buying products from sellers Potential Market All people in population with interest in product/service Available Market People with interest, plus means (money) Qualified Available Mkt. Legally allowed to putchase product/service Served Market Segments targeted by company Potential Market Available Market Qualified Available Market Served Market

4 Stephan Sorger 2016; Ch. 2 Market Insight; 4 Industry Description Topic Industry Category Description Groups of sellers making similar products/ services Example: White Goods (appliances) industry Companies: GE, Westinghouse, Samsung, etc. Subset of industry Group of competing firms selling to market segment Example: High-end kitchen appliance manufacturers Companies: Wolf, Sub Zero, etc. Industry Example: White Goods (Appliances) Category Example: High-end Appliances

5 Market Data Sources Secondary Research Government Data Analyst Reports Business and Trade Publications Other Sources Primary Research Surveys Commissioned Reports B2C: Retail Salespeople B2B: Company Salespeople Stephan Sorger 2016; Ch. 2 Market Insight; 5

6 Government Data Government Data U.S. Census Bureau: Census every 10 years, plus New American Community estimates U.S. Bureau of Labor and Statistics: Data on employment, productivity, inflation, etc. U.S. Bureau of Economic Analysis: Data on national GDP, regional GDP, personal income,.. Local Chambers of Commerce: Data on local area Stephan Sorger 2016; Ch. 2 Market Insight; 6

7 Stephan Sorger 2016; Ch. 2 Market Insight; 7 U.S. Census SIC and NAICS Codes: Purpose Topic Purpose Description Assign unique ID number to every industry Similar to the role of ZIP codes or Dewey Decimal SIC Standard Industrial Classification (1987) NAICS North American Industrial Classification System (1997) 20 Industry Groups, defined using 2 digits each More digits More specific industry segment (6 max)

8 U.S. Census SIC and NAICS Codes: Purpose Stephan Sorger 2016; Ch. 2 Market Insight; Information 513 Broadcasting & Telecommunications 5133 Telecommunications Satellite Telecommunications Satellite Telecommunications

9 U.S. Census NAICS Codes: Industry Groups Stephan Sorger 2016; Ch. 2 Market Insight; 9

10 U.S. Census NAICS Codes: Industry Example Stephan Sorger 2016; Ch. 2 Market Insight; 10

11 U.S. Census SIC and NAICS Codes Stephan Sorger 2016; Ch. 2 Market Insight; 11 Sample Industry Snapshot NAICS 52421, Insurance Agencies and Brokerages

12 Stephan Sorger 2016; Ch. 2 Market Insight; 12 Market Sizing: Data Sources: Reports Data Source Analyst Reports Commissioned Description Available published market reports by industry analysts Analysts cover popular markets and publish reports Expensive: $1,000+ per report; $10,000+ subscription B2C: Arbitron, Dun & Bradstreet, Nielsen B2B: Forrester, Gartner, IDC Specialty firms can conduct custom market research Get exactly the data you need, but $15,000 and weeks Just some of many B2C analyst firms

13 Stephan Sorger 2016; Ch. 2 Market Insight; 13 Market Sizing: Data Sources: Articles Data Source Internet Searches Business Press Trade Associations Blogs, Social Media Description Search available literature on internet Press releases from analyst firms with teaser data Larger markets will have coverage in major media Examples: Fortune, Wired, New York Times Almost every industry has a trade association Low-cost membership; High-quality articles Information available from social media stream Consider reputation of blogger

14 Market Sizing: Stakeholders Marketing Departments - Investigate new markets - Calculate market share Operations Departments Stakeholders for Market Sizing - Products manufacturing: how many units to make - Service delivery: how many people to hire Channel Partners - Number of units to move in channel Financial Services -VC: Large and growing market -- $500M - $1B Stephan Sorger 2016; Ch. 2 Market Insight; 14

15 Market Sizing: Applications Stephan Sorger 2016; Ch. 2 Market Insight; 15 Market Segments - Number & size of segments Market Trends - Take advantage of trends Market Share - Need total size to calculate share Adoption Rate - Keeping up with industry average? Life Cycle - Growth or decline? Market Sizing Applications Market Investment -Continue investing in market? - Explore new niche? Sales Forecasts - Forecast as % of total market Salesforce Sizing - Number of salespersons to hire Distribution Channels - Type of channel(s) to employ

16 Market Sizing Approach: Top Down Stephan Sorger 2016; Ch. 2 Market Insight; 16 General Market * Factor 1 = Intermediate Market 1 * Factor 2 = Intermediate Market 2 * Factor 3 = Objective Market

17 Market Sizing Approach: Top Down Stephan Sorger 2016; Ch. 2 Market Insight; 17 Example General Market/ Population Values

18 Stephan Sorger 2016; Ch. 2 Market Insight; 18 Market Sizing Approach: Top Down Example: Market Size for Eco-Friendly Dental Floss

19 Top Down: Area Market Demand Stephan Sorger 2016; Ch. 2 Market Insight; 19 Geographic Area of Interest Example: State of Ohio General Geographic Area Example: USA

20 Stephan Sorger 2016; Ch. 2 Market Insight; 20 Top Down: Area Market Demand Multiple-Factor Index Example: Eco-friendly floss for Ohio

21 Bottom Up Stephan Sorger 2016; Ch. 2 Market Insight; 21 Add up sales from each potential market segment Example: Total demand for TBM (tunnel boring machines) Market Sub-Segment 1 Sub-Segment 2 Sub-Segment 3 Municipalities Major Construction Companies Bechtel, etc. International sales

22 Bottom Up: Niche Market Process Stephan Sorger 2016; Ch. 2 Market Insight; 22

23 Stephan Sorger 2016; Ch. 2 Market Insight; 23 Market Sizing: Bottom Up: Niche Markets Topic Description Market for PET/CT Scanning Machines Niche Market Limited demand; Expensive Identify Relevant Organizations Determine Quantity of Organizations Multiply Quantity by Price Identify Other Markets $3M each Large hospitals: over 500 beds 5% of hospitals over 500 beds 5,795 hospitals in USA = 290 hospitals Price = $3 million each 290 hospitals * 3 million = $870M Looks for other markets: Urgent Care Repeat process for those markets

24 Stephan Sorger 2016; Ch. 2 Market Insight; 24 Market Sizing: Bottom Up: Market Buildup Example Topic Buildup Example Description You are the marketing manager for a small ad agency Specialty: Professional services in state of Arizona You want to estimate your potential market size 1. Identify Buyers You often do business with the following industries: Accounting, Engineering, and Legal services 2. Identify Buy Rate Research industry average for ads as % of revenue: Industry NAICS Revenue % Accounting $400M 2% Engineering $1,100M 1% Legal $1,400M 3% 3. Sum ($400M)(2%)+($1100M)(1%)+($1400M)(3%) = $61M

25 Stephan Sorger 2016; Ch. 2 Market Insight; 25 Market Sizing: Bottom Up: Limited Distribution Aggregate Market Channel 1 Channel 2 Channel 3 Channel 4 Channel 5 Channel 6 Individual Customers Example: Only 39 Ferrari dealerships in entire United States of America

26 PESTLE Trend Analysis Stephan Sorger 2016; Ch. 2 Market Insight; 26 Present Political Forces Economic Forces Social Forces Technological Forces Legal Forces Environmental Forces PESTLE Trend Analysis Fast Forward into Future Future

27 Stephan Sorger 2016; Ch. 2 Market Insight; 27 PESTLE Trend Analysis Force Political Economic Social Technological Legal Environmental Description and Laptop PC Example Forces due to politics, such as federal regulations Example: Indian customs duties cut: 16% to 8% Forces due to macroeconomic conditions, e.g., inflation Example: Low IT purchases in 2009 due to recession Forces due to social customs, such as fads Example: Trend to chic ultra-portables Forces due to technology changes, e.g. tablet PCs Example: Trend to smartphones and ipads Forces due to new legislation, e.g., new statutes Example: Patent battles Forces due to environmental concerns Example: RoHS Directive for easier recycling

28 Porter Five Force Framework Stephan Sorger 2016; Ch. 2 Market Insight; 28 Present Threat of New Entrants Intensity of Rivalry Pressure from Substitute Products Bargaining Power of Buyers Bargaining Power of Suppliers Porter Five Forces Framework Fast Forward into Future Future

29 Stephan Sorger 2016; Ch. 2 Market Insight; 29 Porter Five Forces Framework Force Threat of New Entrants Intensity of Rivalry Pressure from Substitutes Bargaining Power of Buyers Bargaining Power of Suppliers Description and Examples New organizations/ competitors joining industry Competitors attracted to profitable markets Factors that intensify competition Nearly equal competitors; High exit costs Products/ Services that can replace offering Similar (and dissimilar) products; Services Conditions where buyers call the shots Buyers have full information, thanks to Internet Conditions where sellers hold the power High switching costs, such as software

30 Porter Five Force Framework: Groupon in 2012 Stephan Sorger 2016; Ch. 2 Market Insight; 30 Present Threat of New Entrants Not good: Few barriers to entry Intensity of Rivalry Not good: LivingSocial, Amazon, Google, etc. Pressure from Substitute Products Not good: Many substitutes: FatWallet, etc. Bargaining Power of Buyers Not good: Undifferentiated services Bargaining Power of Suppliers Not good: Not essential to buyers Porter Five Forces Framework Future Fast Forward into Future

31 Stephan Sorger 2016; Ch. 2 Market Insight; 31 Check for Understanding Topic Description Terminology Know the difference between markets and products Data Sources Assemble your go-to list of data sources Sizing Practice sizing with reports, top-down, and bottom-up Trends Find trends using PESTLE & Porter 5 Forces techniques