Enterprise Market Analysis: Key Concepts and Strategies
Topic 18: Analysis of Enterprise Market
18.1 Concept and Market Classes
Market Definition:
A phenomenon that occurs in an exchange relationship between buyer and seller. From a marketing standpoint, this is a very limited concept of localism. Ultimately, it must be understood as all natural or legal persons of a particular area that meet the following requirements: they want or desire to obtain a product to suit a particular need and have the economic and legal capacity to acquire that product.
Market Classes:
- According to juridical personality (consumer markets and industrial markets). Consumer markets are those formed by individuals who buy the product for their personal needs or those of their home. In this case, the buyer is the ultimate consumer of the product. Industrial markets are made up of companies or organizations that buy the product to develop an economic activity, whether for profit or not. Some companies’ products are aimed exclusively at one of these types of markets, but other products may be directed to both. For example, tire dealers can target both manufacturers and consumer markets.
- In function of where it sells its products, we can say that the company operates in a local, regional, national, international, or global market.
Market Segmentation 18.2
Consumers usually have different market characteristics and needs, so they do not seek the same benefit from the purchase, use, and consumption of the product. Both markets are composed of heterogeneous individuals. Companies can adopt three different strategies:
Mass Marketing:
Regards all consumers as a unit, ignoring any differences between them and thus managing the same commercial offer to all (same product, same price, same channels, and same message). This strategy may be appropriate in situations where the level of competition is reduced, but these situations are becoming increasingly rare in today’s world.
Marketing Mix > Mass Marketing > Market
Custom Marketing:
Contrary to mass marketing, this strategy believes that every client is different from the rest, adapting the company’s commercial offering to the specific needs of each. This strategy is only possible when the company offers very personal services. In the case of physical products, it is more difficult to implement because it usually involves high costs, resulting in a very high price. For this reason, it is not considered viable for companies that manufacture consumer goods. However, it can be viable in some industrial markets, such as when an aircraft manufacturer adjusts the seating arrangements on request from the airline.
Custom Marketing > Marketing Mix > Different Client
Although consumers are different, they can be grouped into segments. Segmentation: A process of market division that seeks groups that, on the one hand, are the most homogenous in their characteristics, needs, and behavior and, on the other hand, are the most heterogeneous from others. To address the issue of marketing is to determine what segments exist within the same market and which of them will guide our company policy.
Segmentation Criteria: For segmenting a market, we can highlight two general types and specific criteria, and these in turn can be objective and subjective.
General Criteria: They are independent of the product or the buying process followed by the individual. Objective general criteria, which are more measurable, are: Demographic variables (gender, age, marital status, household size). Socioeconomic variables: income level, education, occupation… Geographical variables: referred to the country or region where consumers live (regional or local newspapers and their publishers). Subjective general criteria include psychographic variables like lifestyle and personality, specially used for the snuff market and fashion labels.
Specific Criteria: They are related to the product or the buying process, such as the term of the purchases made by the consumer, the use made of the product, and brand loyalty. Purchasing situations (these are more subjective). This type of approach is widely used by industry to offer the same food in containers of different sizes and formats.
Usually, a company simultaneously uses several criteria to segment the market, and for that, we can use different statistical techniques. Having identified the existing market segments, we must decide to which of them the company’s commercial offering will be directed. The choice should be based on the economic resources available to the company, its competitive advantages, and the level of competition that exists in every segment.
The individuals who contribute to the segment or segments serviced by the company are its target market or subjective audience. The selection of segments can be viewed under two strategies:
Differentiated Strategy:
This involves offering a commercial offer tailored to the peculiarities of all or most of the identified segments in the market. The adjustment of supply to each segment can be done by varying one or more of the marketing mix variables. Most often, the product and price are changed simultaneously.
Concentrated Strategy:
This involves offering a commercial offer tailored to one or more identified segments. In this case, the company accepts its inability to serve the whole market and decides to concentrate its resources to best accommodate the chosen segments.
18.3 Analysis of Demand
In general, demand is the total volume of purchases made by a certain category of customers in one place and in the course of a given period of time, in a given environment and conditions, for a pre-defined marketing effort. The demand could be measured in physical units or monetary units. This definition is very broad and general, so it needs to be delimited by the following dimensions: Geographical dimension (local, regional…), temporal dimension (long-term, annual, or short-term), buyer dimension (can refer to the entire market or a particular segment of it), and product dimension (the demand may relate to a particular brand or to all products from a competitor in the market, which is considered the global demand).
The demand analysis involves performing three key tasks:
Measuring Demand:
Meeting the demand for a brand and company is usually an easy task by going to the accounting and administrative system of the company, which includes what has been sold in a particular unit and at what prices. Knowledge of global demand is often complex. In some cases, it is usually known through official records that register the sales of all firms in a sector. But in most cases, the global demand has to be estimated either by the company concerned, by industry associations, or by companies specializing in this type of market research. Marketing managers also want to estimate the potential demand, defined as the total number of purchases of a product as it could be bought for a certain category of customers in one place, over a period of time, in a particular environment, if intensive marketing actions are used by all competitors. The potential demand is made for purchases of more effective global customers or purchases that could be caused by individuals who are not clients but have the effective economic and legal capacity to purchase the product.
Furthermore, and as far as possible, the measurement or estimation of the demand must be made on the market as a whole and for specific segments, as the company may find significant differences. It is also important to know the demand by geographical area.
Explaining Demand:
Demand must be understood as a dependent variable whose behavior is explained by a set of explanatory factors. Some of these factors are controlled by the company (quality, price, investment in promotion and advertising, sales, number of establishments), and others are not controlled (the income of potential customers, customs, the economic prospects of the country…). Marketing management must know what these explanatory variables are and determine the influence each has on demand.
Predicting Future Developments:
Marketing management has to make a prediction about what the demand will be in the coming period. This is not about trying to figure out future sales but to make the best possible estimate to set sales targets for the company and products based on this data, determine production needs, funding to hire workers, etc.
The realization of this forecast will be favored if we have accurate information about how the demand behaved in the past, how it is behaving now, and what its explanatory variables are. The demand forecast can be performed with a variety of techniques that complement the experience and marketing director’s instructions.
18.4 Analysis of Consumer Behavior
Depending on the marketing concept of the study will know that their behavior is where the control of all marketing decisions if we know:
· What are the features.
• What is its price.
· A dealer who must sell.
· In that advertisement, it should apply.
· That media used.
Consumer testing process should allow the purchase and consumption or use by individuals whether they are natural or legal persons. Must answer the following questions (to buy, who is buying, how, who, when, where, how).
A thorough understanding of the consumer lets us know your buying decision process, ie the phases that follow from that posed a necessity until after the decision to buy or not a product. These phases are:
• recognition of the need: It is the time when the need arises and the desire to satisfy it.
· Finding information: Through her own experience, as well as external information sources makes the individual look and also satisfy their need for each product or brand identified and reported what their characteristics.
· Assessment of alternatives: We assessed the characteristics of the various products that information has made creating your preferences on them.
· Purchasing decision: Following the evaluation of alternatives will end the decision to purchase the chosen product, not buying any post or to purchase.
· Evaluation of the decision: After a time of purchase will appear on the individual feelings of satisfaction or dissatisfaction with these feelings will influence future purchasing processes, which can lead to brand loyalty or a rejection.
The importance, intensity and duration of these stages vary among individuals and depending on the product to buy. The marketing manager must know which of the following styles of their customers buy are identified:
· Purchase of high involvement or low involvement, the first individuals seek and evaluate alternative uses and low-involvement way around.
· Purchase on impulse or planned: When you buy impulsively the previous process is reversed as first and then decides to purchase the reasons for it.
· Buy rational or emotional: In the case of the characteristics or attributes are valued differently in the third stage.
· Purchase routine or sporadic: the routine phases of information search and evaluation of alternatives can be performed rapidly even these steps do not exist,
18.5 ANALYSIS OF COMPETITION
The company interacts with its competitors on the one hand the actions affect the company’s sales and other commercial actions taken by the company to bring forth an more or less intense reaction by competitors.
The purpose of competition analysis is to assess the strengths and weaknesses of competing companies for comparison with those of the company and to know what are the competitive advantages to compete in the market. Knowing these advantages and disadvantages allowed if the marketing director knows how to give competitors and defend against their attacks.
Who are the competitors: To avoid a problem of competitive myopia should be considered a competitor of the company:
– A competitive brand or product form: Comprised of companies that affect the same market, products and supplies.
– Competition in the product category or industry: Made up of companies that offer the same product but the features are different.
– The generic competition: Made up of all those companies offering substitutes to the company, ie that fulfills the same basic consumer need.
But in addition to existing competitors should be considered potential competitors, companies that have not yet produced a product similar to ours or that can substitute for actually doing so in the future. New competitors may arise from:
“A process of geographical expansion: Coming from different geographic markets of the company. For example in many sectors is showing the development of China with the export of their products.
– A process of diversification in this case the new competitor enter the market to own technological capabilities and / or business to manufacture and market the product.
– A process of backward integration: For a customer who happens to produce the product before buying the company.
– An integration process forward: For which a supplier is to engage in the activity of the company.
Once identified competitors is necessary to assess the situation and the characteristics considered most important in gauging the possible strategies and actions that business can undertake in the future and how to defend themselves from a possible action from the business.
I nformation commercial competitor must know:
· That product sells.
· In that market segment is preferentially directed.
• In which geographical area offers its products.
· That market share has in each area and in each segment.
· That marketing mix used.
18.6 The macro ANALYSIS
One of the tasks of marketing is to analyze the trend of various microenvironment factors are the factors (economic, demographic, technological, political, legal and sociocultural) in order to evaluate the effects that might take on the market the company will adopt appropriate business strategies to exploit opportunities and to combat threats.
The macro factors can take the following facilities:
– You can trigger the onset of a new market or market segment or that an existing exercise attractive. For example the spread of Internet is growing the purchase through this medium.
– Can lead to the disappearance of a market or market segment to an existing or lose appeal.
– You can change the way you manage a business or product design complementary services offered to the customer.