Tom Gillpatrick, Ph.D.

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Global Marketing

• Tom Gillpatrick, Ph.D.
• Juan Young Professor of Marketing Executive
  Director, FILC
• Master International Management Program
• School of Business Administration
• Portland State University

Fall 2004 MIM 515 10-Nov
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Agenda

• Market Research
• Competitor Analysis
• Colgate Case
• Samsung Case
• Case Analysis Discussion
• Quiz

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Marketing Research Defined
Marketing research is the planning, collection,
and analysis of data relevant to marketing
decision making and the communication of the
results of this analysis to management.
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Market Research Examples

• Product marketing
• Packaging tests
• Naming
• Price/voluem estimation
• Advertising effectiveness
• Channels
• Dealer programs
• Direct sales evaluation
• Win/loss studies

• Market strategy
• Segmentation
• Profiling
• Market simulation
• Corporate marketing
• Branding
• Image tracking
• Positioning
• Web site evaluation

International Research Griggs-Anderson/Gartner
Consulting
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Market Research Examples

• Customer satisfaction
• Tracking studies
• Models
• Transaction monitoring

• Product development
• Concept testing
• Feature valuation
• Consumer ethno-graphics
• Beta tests

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Managing the Research Process

• Factors influencing a managers decision to use
  research information.
• Conformity to prior expectations.
• Clarity of presentation.
• Research quality.
• Political acceptability within the firm.
• Lack of challenge to the status quo.

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Forward Research Design
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Turning the Process on Its Head

• The backward approach I advocate rests on
  the premise that the best way to design usable
  research is to start where the process usually
  ends and then work backward.
• Determine how the research results will be
  implemented (this helps to define the problem).
• To ensure the implementation of the results,
  determine what the final report should contain
  and how it should look.
• Specify the analyses necessary to fill in the
  blanks in the research report.

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Turning the Process on Its Head

1. Determine the kind of data that must be assembled
   to carry out these analyses.
2. Scan the available secondary sources and/or
   syndicated services to see whether the specified
   data already exist or can be obtained quickly and
   cheaply from others. (While you are at it, you
   should observe how others have tried to meet data
   needs like your own.).
3. If no such easy way out presents itself, design
   instruments and a sampling plan that will yield
   the data to fit the analysis you have to
   undertake.

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Turning the Process on Its Head

• Carry out the field work, continually checking to
  see whether the data will meet your needs.
• Do the analysis, write the report, and help
  management make it have its intended effects.
• What else does this process do?

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Backward Research Design
Determine what key decisions are to be made using
research results
Determine what information will help
management make the
best decisions
Prepare prototype report and ask management if
this is what will best help them make their
decisions
Determine the analysis that will be necessary to
fill in the report
Determine what questions must be asked to
provide the
data required by the analysis
Ascertain whether the needed questions have been
answered already
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Backward Research Design
Design sample
Implement research design
Analyze data
Write report
Assist management to implement the results
Evaluate the research process and contribution
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Advantages of Manager Participation in Backward
Research

1. It serves to co-opt managers into supporting the
   research work should it be criticized later by
   others.
2. It deepens their understanding of many of the
   details of the research itself and their
   appreciation of both its strengths and its
   weaknesses.
3. Working with hypothetical tables can make the
   manager eager for the findings when they do
   appear and ready to implement them.

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Advantages of Manager Participation in Backward
Research

1. Working with contrasting tables makes it unlikely
   that the manager will be startled by surprising
   results, an outcome that sometimes causes a
   manager to reject an entire study.
2. Participation will also help reveal to management
   any limitations of the study. In my experience,
   managers are often tempted to go far beyond
   research truth when implementing the results,
   especially if the reported truth supports the
   course of action they prefer to take anyway.

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Whats Important Depends on Your Perspective
Relative Importance
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Engineering Perspective
0
Marketing Perspective
-1
Price
Display
Marketing people put more emphasis on price while
engineering puts more perceived customer value in
display.
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Estimating Market Potential

• Current market demand
• Demand for our firm
• Demand for all competitive firms
• Potential demand
• Not aware
• Not available
• Unable to use
• Lacks benefits
• Not affordable

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Demand
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Estimating Current Demand

• Total market potential
• Area market potential
• Industry sales
• Market share

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Ninety Types of Demand Measurement (6 X 5 X 3)
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Factors Driving Market Growth

• Current factors
• Felt need
• Perceived risk
• Innovativeness
• Type of decision
• Product positioning
• Relative advantage
• Relative cost
• Relative complexity
• Ease of use
• Market influences
• Observability
• Trialability
• Marketing effort

• Faster growth
• High
• Low
• High
• Individual
• Attractive
• Low
• Minimal
• Easy
• Easily seen
• Easy to try
• Extensive

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Performance MeasurementInternal Measures
External Measures

• Unit Cost
• Mfg. Overhead
• Mktg. Expense
• RD Expense
• Inventory Turn
• Sales/Employee
• Days Act.s Receivable
• ROS, ROI, ROE
• Asset Turnover

• Market Share
• Relative Share
• Customer satisfaction
• Market Coverage
• Product awareness
• Relative quality
• Relative Price
• Customer Preferences
• Relative New Product
• Response Time

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Market Strategy, Marketing Mix, Performance
Customer Satisfaction
Market Strategy
Market Mix Strategy
Net Marketing Contribution
Roger Best, 1997 Market-Based Mgt.
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Fundamental Market-Based Strategies Profit
Growth
Grow Customer Purchases
Strategies to Grow Demand
Manage Market Share
Net Marketing Contribution
Revenue Variable per - Cost
per Customer Customer
Market Demand
Market Share
Marketing Expense
X
X

-
Increase Marketing Efficiency
Enter or Exit Markets
Lower Variable Cost per Customer
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COMPETITOR ANALYSIS

• What You Should Expect From A Competitor Analysis
• Which competitors does our strategy pit us
  against?
• What are competitor strengths and weaknesses?
• (Core capabilities, ability to grow, ability
  to respond)
• What are your competitors strategies?
• What kind of counter moves will the competitor
  accept?
• Which moves has it already countered?

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Induce your competitors not to invest in those
products, markets and services where you expect
to invest the most that is the fundamental rule
of strategy. Bruce Henderson,
Founder of BCG
There is nothing more exhilarating than to be
shot at without result.
Winston Churchill
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Five Forces Determining Segment Structural
Attractiveness
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PORTERS FIVE FORCES MODEL
Determinants of Supplier Power Differentiation of
Inputs Switching Costs Presence of substitute
inputs Supplier concentration Importance of
volume to supplier Cost relative to total
purchases in the industry Impact of inputs on
cost or differentiation Threat of forward vs.
backward integration
Entry Barriers Economies of scale Proprietary
product differences Brand identity Switching
costs Capital requirements Access to
distribution Absolute cost advantages Proprietar
y learning curve Access to necessary
inputs Proprietary low-cost product
design Government Policy Expected retaliation
Determinants of Buyer Power Buyer concentration
vs. firm concentration Buyer volume Buyer
switching costs vs. firm switching costs Buyer
information Ability to backwards
integrate Substitute products Pull through
Rivalry Determinants Industry growth Fixed
costs/value added Intermittent
overcapacity Product differences Brand
identity Switching costs Concentration
balance Informational complexity Diversity of
competitors Corporate stakes Exit barriers
Price sensitivity Price/total purchases Product
differences Brand identity Impact on
quality/performance Buyer Profits Decision
makers incentives
Competitive rivalry
Substitutes Relative price/performance of
substitutes Switching costs Buyer propensity to
substitute
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Competitor Analysis Competitive Positioning

• Competitive Environment
• Market Entry/exit
• Buyer/supplier power
• Substitutes/rivalry
• Competitive Position
• Competitor intelligence
• Competitor analysis
• Competitive benchmarking
• Competitive advantage
• Cost advantage
• Quality advantage
• Marketing advantage

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Competitive Position Competitive Advantage

• Cost Advantage
• Variable Costs
• Marketing Expenses
• Operating/Overhead Expenses
• Differential Advantage
• Product Differentiation
• Service Quality
• Brand Reputation
• Marketing Advantage
• Distribution
• Sales Effort
• Marketing Communications

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Developing Competitive Advantage
Superior
Differentiation with Cost Advantage
Differentiation Advantage
Relative Differentiation Position
Stuck-in-the Middle
Low Cost Advantage
Inferior
Inferior
Superior
Relative Cost Position
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Niche Mainstream
Pro Forma Pro Forma Year 1 Year 2 Year 1 Year 2
Unit Volume Unit Volume 13,000 20,000 42,000 59,000

Retail unit sales Retail unit sales 8,000 15,000 27,000 44,000
Retail Dollar Sales Retail Dollar Sales Retail Dollar Sales 16,160.00 30,300.00 47,520.00 77,440.00
Professional unit sales Professional unit sales Professional unit sales 3,000 3,000 8,000 8,000
Professional Dollar Sales Professional Dollar Sales Professional Dollar Sales 2,466.00 2,466.00 6,576.00 6,576.00
Total Unit Sales Total Unit Sales 11,000 18,000 35,000 52,000
Total Dollar sales Total Dollar sales Total Dollar sales 18,626.00 32,766.00 54,096.00 84,016.00
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Niche Mainstream
Pro Forma Year 1 Year 2 Year 1 Year 2
Manufacturing Costs 7,260.00 11,880.00 22,400.00 33,280.00
Sampling costs 1,320.00 1,320.00 4,480.00 4,480.00
Adv. Promotion 11,200.00 11,700.00 32,800.00 29,000.00
Capacity Costs 317.00 450.00 887.00 1,270.00
Total Costs 18,777.00 24,030.00 56,087.00 63,550.00
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Niche Mainstream
Pro Forma Pro Forma Year 1 Year 2 Year 1 Year 2
Operating Profits Operating Profits (151.00) 8,736.00 (1,991.00) 20,466.00
Profits as Percentage of Sales Profits as Percentage of Sales Profits as Percentage of Sales -81 26.66 -3.68 24.36
Cost of Cannibalization Cost of Cannibalization Cost of Cannibalization 2,298.00 3,761.00 12,537.00 18,626.00
Profit after cannibalization Profit after cannibalization Profit after cannibalization (2,449.00) 4,975.00 (14,527.00) 1,840.00
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Objectives Colgate Case

• To explore the evolution of a product category,
  demand for which is largely derived from usage of
  a related product.
• To review a new product development process and
  the importance of evaluating product company and
  product market fit in assessing NPD
  opportunities.
• To emphasize the importance and marketing program
  implications of determining whether a new product
  represents a big breakthrough idea or a line
  extension.
• To consider the relative merits of emphasizing a
  corporate brand umbrella vs. an individual brand
  names when launching a new product.

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Samsung Case

• To Illustrate the critical importance of
  effective marketing in achieving a corporate
  turnaround.
• To demonstrate the cross-border consumer research
  in guiding global brand repositioning.
• To explore the marketing planning and budgeting
  challenges typical of a multinational company
  (MNC) with a single global brand.
• To explore the responsibilities of a CMO in a
  major MNC.

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Summary for Case Analysis

• What is a case?
• What is purpose of case analysis?
• How to analyze a case?
• How to write a case?
• How to discuss a case?
• Questions?

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Written Case Analysis MIM 515

• Format- 5 pages
• Executive summary- 1 page
• Analysis
• Conclusion
• Attachments/Appendix (optional)

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Executive Summary

• Introduction
• Overview of key issues
• Decision Context
• Problem Statement
• What are key managerial problems
• Use question format, prioritize
• Focus- underlying problem Vs. symptom
• Recommendations
• Do they address problem(s)

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Case Analysis

• What is analysis?
• Critical breaking apart data/facts and processing
  to add meaning
• Can be quantitative or qualitative
• Developing structure to convey meaning- eg.
  pro/con analysis, model
• What is NOT analysis?
• Restating case facts
• listing solutions

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Recommendations

• Link to key problems.
• What are implications for action?
• Do not confound with analysis section.
• Is there a theme?
• Are recommendations supported by analysis? Do
  they flow from analysis?

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Appendix-Examples

• Do you have any graphs charts that support
  analysis?- (label, reference)
• Calculations that are too detailed for body of
  paper
• Assumptions that you feel are necessary to
  support analysis

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Industry Research
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Research Overview Key Questions

• What is the target industry?
• What is the industry overview?
• What are the industry norms?
• Who are the key players?
• What is the size of the market market share?
• What are the forecasts and trends?

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What is the target industry?

• Internet
• SIC Manual Online http//www.osha.gov/oshstats/si
  cser.html
• NAICS SIC Correspondence Tables
  http//www.census.gov/epcd/www/naicstab.htm
• Paper (behind Business Reference Desk)
• SIC Manual HF1042 .U58 1987
• North American Industry Classification System
  (NAICS) HF1042 .N67 1998

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What is the industry overview?

• Internet
• Hoovers http//www.hoovers.com/industry/resources
  .html
• Current Industrial Reports http//www.census.gov/
  cir/www/index.html
• VIKAT http//www.lib.pdx.edu/netwk/sirsi.html
• Paper (Basement)
• Moodys Industry Review Reference HG4961.M68
• Standard and Poors Industry Surveys Reference
  HG4905.S66
• Manufacturing USA Reference HD9721 .M364

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What are the industry norms?

• PSU Databases
• ABI Inform
• Lexis - Nexis
• Investext
• Paper (behind Business Reference Desk)
• Almanac of Business and Industrial Financial
  Ratios HF5681 .R25 T68
• Industry Norms and Key Business Ratios HD9724
  .I514

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Who are the key players?

• Internet
• Forbes Annual Report on American Industry
  http//www.forbes.com/
• PSU Databases
• http//www.lib.pdx.edu/netwk/databases.html
• Disclosure Global Access (sort by SIC)
• Paper CorpTech Directory of Technology Companies
  Reference T12 .C82

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What is size of market/market share?

• PSU Databases
• http//www.lib.pdx.edu/netwk/databases.html
• ABI Inform
• Lexis - Nexis
• Investext
• Paper (behind Business Reference Desk)
• Market Share Reporter HF5410 .M35
• U.S. Industry and Trade Outlook
  HC106.5 .A17

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What are the forecasts and trends?

• PSU Databases
• http//www.lib.pdx.edu/netwk/databases.html
• Investext
• Lexis - Nexis
• ABI Inform
• Paper
• U.S. Industry and Trade Outlook HC106.5.A17
  (behind Business Reference Desk)
• Standard Poors Industry Surveys Reference
  HG4905.S66

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Quiz 3 Due 11-15

1. C6-n6
2. C6-n10
3. C6-n12, part two use Costco (rather than Sears
   K Mart)
4. C7-n1
5. C7-n11
6. Briefly apply Ch4 GM to Samsung case relative to
   benefits and challenges of global branding