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Industry/Market Potential

Industry/Market Potential. Understanding Segments and Exploiting Gaps. Mapping the Industry or Market. Key Questions: What products are in the industry? Which markets or customers are served? Who are the current competitors? Where are the competitors found?.

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Industry/Market Potential

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  1. Industry/Market Potential Understanding Segments and Exploiting Gaps

  2. Mapping the Industry or Market Key Questions: • What products are in the industry? • Which markets or customers are served? • Who are the current competitors? • Where are the competitors found?

  3. THE BASIS FOR SEGMENTATION: CUSTOMER AND PRODUCT CHARACTERISTICS

  4. Customer Type (Geographic Region) Segment of the U.S. Beer Market North-east Midwest South-east South-west West Luxury-priced imports Product Type Super premium Premium beers (except light) Light beers Popular budget-priced Malt liquor Independent food stores, convenience stores Bars & Restaurants Supermarkets Liquor Stores Distribution channel

  5. Which are the Biggest, Fastest Growing, and Most Profitable Customer Segments? • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments Circle size represents millions spend CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments Segments to Focus On Segments to Focus On Segments to Focus On Segments to Focus On Segments to Focus On Segments to Focus On Segments to Focus On Segments to Focus On • Data Needed • Identification of customer segments (according to needs, behaviors, and key characteristics) • Current size and value of each customer segment • Probability of each customer segments Segments to Focus On High High High High High High High High High SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY SEGMENT PROFITABILITY Low Low Low Low Low Low Low Low Low High High High High High High High High Low Low Low Low Low Low Low Low High Low SEGMENT GROWTH SEGMENT GROWTH SEGMENT GROWTH SEGMENT GROWTH SEGMENT GROWTH SEGMENT GROWTH SEGMENT GROWTH SEGMENT GROWTH Circle size represents millions spend Circle size represents millions spend Circle size represents millions spend Circle size represents millions spend Circle size represents millions spend Circle size represents millions spend Circle size represents millions spend

  6. Analyzing segment alternatives: Applying the five forces of competition. Buyer types Product types

  7. Two-Dimensional Niche Space for Two Competitors, A and B

  8. Outcomes of Segmentation Analysis • Who buys our product and why ° (buyer profiles-psycho/socio/geo/demographic) ° Need or function fulfilled ° Problems solved • Who does not buy our product (light users—non-buyer profiles) ° When purchased ° Where (channel) purchased

  9. •Rivals & Substitutes° Which competitors are selling what and to whom° What alternatives are buyers purchasing to satisfy the need/function/problem for which our product competes• Segment Attractiveness ° Current size-revenue/profit potential ° Demand penetration/growth ° Competition ° Compatibility with strategy/supply/distribution chain

  10. Segmentation Gap Analysis Allows Managers to:Divide the market into meaningful and measurable segments according to customers’ profiles (needs, attitudes, behaviors, attributes) and products offered (existing or new).Estimate the size and profit potential of each segment by analyzing the revenue and cost impacts of serving each segment.

  11. Target segments according to their potential (profit, entry, defensive) and to the company’s ability to serve them in a proprietary way. Invest resources to tailor product, service, marketing, and distribution programs to conform to the needs of each targeted segment. Continuously monitor each segment (customer/product shifts, competition, penetration) and adjust the approach over time as conditions change.

  12. Before Entry - Some Important Questions to Ask • What gaps will you fill? And why does that gap exist? • Will your entry give rise to a new product market? • How will your entry affect current product markets? • How might current competitors respond to your entry? • How will targeted customers respond to your entry? • What competitive advantage (if any) will you possess? • What might be your major vulnerabilities? • What can your firm do to preempt and respond to competitors?

  13. Identify Potential Market Gaps Can’t afford at this price Price/cost Untapped Market Demand Potential No. of Customers Competitor’s products satisfy Competitive Gap Product does not fit customer’s needs or situation Usage vs. Needs Compatibility Performance, speed, features, etc. Current Business Segment 60% Noncustomers cannot obtain Distribution gap Personal Users 40% Noncustomers unaware Usage Gap

  14. Price/Product line gap Distribution gap Expand the product line a. Fill out existing product line b. Add product line elements  Expand distribution a. Broaden distribution coverage b. Increase distribution intensity c. Improve distribution exposure Stimulate heavier use a. Find new users by 1  1.Stimulating nonusers to use 2  2.Stimulate light users to use more 3  3.Increase amount used each occasion b. Find new uses for the product c. Promote product usage at new times Penetrate competitors’ positions a. Direct assault on competitors b. Attack substitutes  Defend your present position Usage gap Competitive gap Your sales

  15. Three Different Types of Distribution Gaps 1. Distribution COVERAGE Gap Firm fails to distribute its products in all geographic regions 2. Distribution INTENSITY Gap Firm has an inadequate number of outlets to distribute its products 3. Distribution EXPOSURE Gap Firm has poor or inadequate shelf space, location, displays, etc. within outlets

  16. Analyzing segment alternatives: Applying the five forces of competition. Buyer types Product types

  17. Levi’s possible growth modes Existing Products New Products Market Penetration Strategy Product Development Strategy Existing Markets Market Development Strategy Product/Market Diversification Strategy New Markets

  18. Repositioning Levi’s High Price Lewis has figured out that kids don’t wear the same jeans their parents do and that trendy retailers don’t stock the same lines as J.C.Penny. So it’s creat- ing a portfolio of dozens of brands and sub-brands, from cheap basics to high-priced fashion Vintage $125+ Dockers Equipment For legs $100+ Red Line $100 Sta-Prest $75 Dockers K-1 $65 Slates $65 Slates Collection $60 Red Tab Elesco $60 Dockers Premium $50 Red Tab Dry Good $45 Silver Tab $45 Classic 501 $35 Designer L2 $30 Red Tab Basics $30 Dockers Classic $30 Low Price

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