Chapter 3

Market Opportunity Analysis

and Consumer Analysis
Strategic Marketing
vs.
Tactical Marketing
Strategic Marketing Process
• -seeks to establish a clear and concerted
direction for all marketing activities of an
organization. It includes plans to reach
specific goals/objectives.
MISSION SITUATION OBJECTIVE
IDENTIFICATION ANALYSIS SETTING

STRATEGY MARKETING
EVALUATION STRATEGY
AND DEVELOPMENT
CONTROL
Step 1:Mission Identification
-defines
what an organization is,
why it exists,
its reason for being,
its primary customers,
the products and services it produces,
and its geographical area of operation
Example of Mission Statement
• “To provide branded products and services
of superior quality and value that improve
the lives of the world’s consumers. As a
result, consumers will reward us with
industry leadership in sales, profit, and
value creation, allowing our people,
shareholders, and the comminities in
which we live and work to prosper.”
Step 2: Situation Analysis
• -this step assesses and evaluates the
market and customers, competitors,
and the company’s internal and
external environment. The objective
is to identify the company’s strengths
and weaknesses, as well as the
available opportunities and possible
threats.
Step 3: Objective Setting
• -Objectives are marketing targets that are
S.M.A.R.T.
• These enable a company to control its
marketing plan and provide a consistent
focus for all functions of an organization.
• These include sales revenues, market
share, and profits.
Step 4: Marketing Strategy
Development
- involves market segmentation,
identification of target market,
positioning, selection of broad
marketing strategies, and the
translation of strategies in to action
plans.
Strategies can be broadly
classified into three categories:
• 1. Cost Leadership- this is a strategy for
achieving low cost leadership among
industry competitors. Cost leadership can
be achieved through low cost supply
contracts, overhead expense control,
economies of scale, comprehensive cost-
cutting efforts, among others.
Strategies can be broadly
classified into three categories:
• 2. Differentiation- seeks to achieve
superior products attributes and features
that are different from industry
competitors.
Strategies can be broadly
classified into three categories:
• 3. Focused- efforts are concentrated on a
relatively small but profitable market. The
development of products and services
primarily ensures that the needs and
wants of this market are addressed and
that satisfaction is provided.
Cost Leadership,
differentiation, and Focused
may be implemented through
• 1. Forward Integration
• -this involves gaining ownership or increased
control over distributors or retailers.
2. Backward Integration
-this involves gaining ownership or increased
control over suppliers.
3. Horizontal Integration
-this involves purchase of or increased control
over competitors.
• 4. Market Penetration
-the objective of this strategy is to increase the
market share of current products or services in
current market through greater and more
intensive marketing efforts.
5. Market Development
-this strategy involves the introduction of
existing products or services into a new
geographical area or market.
6. Product Development
-this strategy involves the improvement of
current products or services or the
development of new products with the purpose
of increasing sales.
7. Related Diversification
-this involves introducing new but related
products or services.
8. Unrelated diversification
-this involves introducing new but
unrelated products or services.
9. Retrenchment
-involves halting or reversing declining
sales and profits through cost or asset
reduction.
10. Divestiture
-this involves selling a division or part
of an organization.
11. Liquidation
-this involves selling all of a company’s
assets, in parts or as a whole, for their
tangible worth.
Step 5: Strategy Evaluation and
Control
• -after the strategy is developed, periodic
monitoring and evaluation are needed.
This is necessary to identify deviations and
make necessary adjustments and
corrections.
Tactical Marketing Process
• -determines the means or tactics to
implement the strategies. It involves the
identification of specific activities,
timetable, responsibilities, and budgets
and their implementation. The objective is
to ensure that the strategies are
implemented successfully.
 Marketing Activity Monitoring and
Strategies Budgets Control

Action Responsibility/
Plans/Tactics Accountability

Marketing Activity
Activities Timetable
Example: To increase Sales by
10%
• Market Strategy: Market Penetration
• Identify the tactics, or activities that it
should undertake (like increasing prices
and to do intensive promotions.
• Develop action plan- is a sequential series
of marketing activities.
• Timetable for each activity
• Pinpointed responsibilities and
accountabilities for each
• Corresponding Budgets
• Oftentimes, it is necessary to utilize two or
more action plans to ensure successful
implementation.
• These are monitored regularly to ensure
effectiveness.
 DIAGNOSTIC TEST

UNDIFFERENTIA
SATISFACTION MARKET SHARE DURABLE
TED GOODS

CONSUMER CURRENT PRIMARY

BRANDING
GOODS DEMAND DEMAND

BRAND EQUITY MARKETING CONSUMABLE

• __________1. It is a form of communicating
or promoting the value of a product, service,
or brand to the consumers.
• __________2. These are goods that are
purchased for personal consumption and/or
for household use.
• __________3. These are products whose
physical characteristics are so identical, that it
would be difficult, if not impossible, to
distinguish one purchased from one vendor
or another.
• __________4. This is the ability of the
manufacturers to successfully distinguish
their products from other competitors.
• __________5. This is the appreciation in a
brand’s value from the point of view of
customers.
• ________6. It is a product whose benefit can
only be used by a consumer for a short
period of time, sometimes only a few
minutes.
• ________7. These are products that are
manufactured to last a long time.
• ________8. refers to the total demand for all
brands of a particular product or service.
• ________9. the number of people of a
particular market at present that would
actually purchase the product or service
offered.
• ________10. refers to measure of how well
customer expectations from a purchased
product or service have been met.
Principle
of
Marketing
PRINCIPLE – is a fundamental truth or
proposition that serves as the foundation
for a system of belief or behavior or for a
chain of reasoning.
MARKETING- is a form of communicating
or promoting the value of product, service
or brand to the consumers.
MARKET
-is a group of individual or organizational
customers who have both the willingness
and financial capability to purchase a
particular product or service.
NEEDS vs WANTS vs DEMAND
• NEED is something that a person must
have in order to live or survive.
• On the other hand, WANT is
something that a person desires to
have. This is formed because of
individual preferences.
• While, Demands are wants that are
backed up with buying power.
Maslow’s heirarchy of needs
• Physiological Needs- basic needs for survival.
The human body will not be able to function
normally if these are not met.
• Safety Needs- people need to feel secure once
they satisfy their basic needs.
• x Personal Security- refers to living in a
community that is free from crime and violence.
• x Financial Security- this is characterized by job
security and financial freedom.
• x Health- pertains to being free from sickness and
having a healthy body.
• x Assurance- this can be in the form of health/life
insurance that provides security should an accident
or death occur.
• Social Needs- Love and belonging needs. As the
saying goes, No man is an island.
• Esteem Needs- people need to feel respected and
confident about themselves.
• Self-actualization- this level refers to the need for
achievement after working hard for something. It
drives people to maximize their full potential and to
actually work hard to realize their dreams.
Market Demand
• is the total demand of all
potential customers for a specific
product or service over a specific
period in a specific market area.
Market Demand can either be:
1.Primary Demand- the total demand
for all brands.
2.Selective Demand- the demand for a
specific brand of a product or service.
Definition of Terms
• Potential Demand- emerges when there is no demand
yet for a particular product/service, but there exists a
market with sufficient financial capability to purchase.
• Latent Demand- results when customers in a market are
unable to satisfy specific desires because there is no
product or service in the market that can satisfy them. It
can also result when the product or service is available ,
but is price beyond their reach.
• Current Demand- is defined as the number of people of
a particular market at present that would actually
purchase the product or service offered.
• Utility- refers to the total satisfaction consumers
can receive from the consumption of a product
or service.
• Value- refers to the value customers place on a
product or service.
“The product with the highest quality does not
always provide the highest value for customers.”
The perception of value is affected by the cost
required to acquire the product or service.
• Satisfaction- is the measure of how well
customer expectations from a purchased
product or service have been met.
To ensure maximum customer
value and satisfaction,
marketers need to:
• Balance product or service quality and price.
• Establish consistency among product availability,
level of customers service, and efficiency.
• Create buying atmosphere and deliver purchase
convenience.
Customer-Perceived Value
• -is the quantitative difference between the
expected benefits and cost of a particular
product or service in comparison to a
similar product or service.
• Customers make purchases based on their
perception of its ability to satisy his/her
needs and requirements.
• With this, marketers invest heavily on
packaging and labeling.
Customer Value Proposition
• - is a comparison of the benefits offered by
a company’s products to its customers in
relation to the amount it is asking
customers to pay.
• Marketing strategies enhance a product’s
customer value proposition by
emphasizing key attributes of the brand
in relation to competitor’s brand and
communicating to customers:”Why us?”.
Competition
• A Competitor is any company in an
industry or a similar industry that
offers a similar product or service.
Levels of Competition
• 1. Desire competitors- this is identified and
established first before the customer starts
thinking of a possible destination to satisfy
his need or want.
• 2. Generic Competitors{indirect)
• 3. Form Competitors(indirect)
• 4. Brand Competitors- are the most “direct”
competitors because they offer the same
form of product the customer has finally
decided to consume.
Levels of Competition
1. Desire Competitors 2. Generic Competitors

“What desire do I want to “What do I want to eat?”

satisfy?” Sandwich
Eat Dimsum
Text Pasta
Read Chicken
Drink
3. Form Compoetitors 4. Brand Competitors

“What kind of sandwich?” “What brand of hamburger

Chicken sandwich?”
Cheese Wendy’s
Hotdog McDonald’s
Hamburger Jollibee
Burger King
Mr. Beefy
Traditional vs. Contemporary
Approaches to Marketing
Traditional Approaches to
Marketing
• 1. The Production Concept- assumes that
customers prefer products that are
inexpensive, affordable, and widely available.
Efforts are concentrated toward expanding
distribution and improving production
efficiency. The objective is to lower
production costs resulting in lower prices.
However, this is relevant only if customer
taste and preference are stable and product
demand is high.
Traditional Approaches to
Marketing
• 2. The Product Concept- assumes that
customers will always prefer and patronize
products of high quality. Resources are
focused on product improvement and
innovation. But too preoccupation on product
quality may neglect the customer’s changing
needs.
Traditional Approaches to
Marketing
• 3. The Selling Concept- emphasizes
aggressive selling and promotional efforts. It
assumes that customers are generally timid
and must be persuaded into buying. The
objective is to sell what is manufactured
rather than manufacture what the market
wants.
Contemporary Approaches to
Marketing
• 1. The Marketing Concept- considers the
needs of both the customer and the
product offered. The objective is to
provide a solution to the customer’s actual
or perceived problem.
Contemporary Approaches to
Marketing
• 2. The Relationship Marketing Concept-
believes that all marketing activities are for
the purpose of establishing , maintaining, and
strengthening meaningful long-term
relationship with customers. Extensive
customer databases are created, maintained,
and updated. Customer profiles, purchase
habits, and preferences are tracked and
monitored. This is to ensure that customer’s
needs are fulfilled and the relationship is
maintained.
Contemporary Approaches to
Marketing
• 3. The Societal Marketing Concept- is
similar to the marketing concept.
However, beyond providing solution to
customers, it also includes consideration
that protect the customers’ well-being and
interest, as well as the interest of the
environment and society.
Market Share
• - is the measure of effectiveness of marketing
strategies in an industry.

• FORMULA:

• Market Share =
Example
COMPANY MARKET SHARE ANNUAL TOTAL REVENUE
REVENUE OF THE INDUSTRY

A Php 600,500.00 Php 950,000.00

B Php 350,000.00 Php 765,000.00

C Php 156,000.00 Php 845,000.00

D Php 65,000.00 Php 487,000.00

E Php 120,000.00 Php 355,000.00

How to Measure Market
Demand? Is it posiible?
YES, it is.
• Statistic Agency
• Survey
Goals of Marketing:
1. Understand the market and its
consumers, satisfy their changing needs
and wants.
2. Introduce and innovate products and
services that improve human condition
and the quality of life
3. Design and implement effective
customer-driven marketing strategies.
1. Develop marketing programs that deliver
superior value to consumers.
2. Build and maintain mutually beneficial
and profitable customer relationships.
3. Capture customer value to create profits.
4. Promote value transactions with full
regard to the well being of societies.
Marketing Process
SITUATION ANALYSIS:
1. Microenvironment
2. Macroenvironment
3. The Market
4. Customers
5. Competition
6. SWOT
MARKETING STRATEGY
FORMULATION:
1. Market Segmentation
2. Target Market Selection
3. Value Proposition
4. Product Positioning

IMPLEMENTATION AND MARKETING MIX

CONTROL: DECISION:
1. Implementation 1. Product
2. Monitoring 2. Price
3. Marketing mix adjustment 3. Place
4. Promotion
MARKETING MIX
• Is composed of four elements also known
as 4Ps: Product, Price, Place, and
Promotion.
PRODUCT- creating value
• Product can be goods or services that are offered
to the market. How do we create value? To be
able to sell product in the market, consumers
must understand its value and must perceive it
as something worth buying.

• Goods- are tangible products which can be touch

physically.
• Services- are intangible benefits a customer
enjoys that are performed by people or machine.
PRICE- capturing value.
• Captures the value of a product’s offering
when you put a price tag that equates to
the benefits the product offers to
consumers. In return, a company captures
value or profit from payment made by the
customer in exchange for the product.
Place- Delivering Value
• Includes the necessary activities to make
the products available to consumers.
Companies are concerned on where they
sell their products.
Promotion- Communicating Value

•Is the component that

informs, persuades, and
reminds potential buyers of
the value they can get from
the product.
Marketing Products
• Product Levels:
1. Core or generic Product- can be defined as the purpose for
which the product was created.
2. Formal Product- it is the creation of second product level to
be added on to the product’s core or generic function. This
level includes factor that could effectively differentiate from
the others. (Features, Styles, Price, Colors, etc…)
3. Augmented Product- this level is necessary in case of
expensive products. Because of their relative high price, most
customers may not have immediate funds available for
purchase. (Credit Terms, Installment terms, installation,
warranty, service, & repairs and maintenance)
Classification of Products
According to USE:
• 1. Consumer Goods- are goods that are
purchased for personal consumption and or
houshold use.

• 2. Industrial Goods- are purchased in order to

make other goods, to serve as raw material or
input in the production of other goods.
According to Differentitation:
• 1. Undifferentiated goods- are products whose
physical characteristics are so identical, that it
would be difficult, if not impossible to, to
distinguish one purchase from one vendor or
another.

• 2. Differentiated goods- are varied in their

characteristics and features that make them
distinguishable from one another. Differentiated
goods is possible when branded.
• Branding is the ability of the manufacturer to
successfully distinguish their products from
other competitors.

• Brand Equity- is the appreciation in a brand’s

value from the point of view of customer.
According to Durability
• 1. Consumable- is a product whose benefit can only be
used by a consumer for a short period of time,
sometimes only a few minutes or days.

• 2. Semi-durable- provides benefit to th consumer for a

longer period of time, usually spanning several months.

• 3. Durable- are products that are manufactured to last a

long time. They are capable of providing consumers with
years of beneficial use.
According to Type:
1. Convenience Goods- are products that are purchased
frequently, are usually inexpensive, and do not require much
purchase effort and evaluation.
2. Shopping Goods- are purchased less frequently than
convenience goods, are relatively more expensive, and
require some amount of information search and evaluation
prior to purchase.
3. Specialty Goods- are goods that require an unusually large
effort on the part of consumers to acquire.
4. Unsought Goods- are goods that consumers seldom
actively look for , and are usually purchased for
extraordinary reason, such as fear or adversity, rather than
desire.
Marketing Services
• Services has four major attributes:
• 1. Intangibilty
• 2. Variability- “No service provider can render
the same service in exactly the same every single
time.”
• 3. Inseparabilty- the service provider must be
present each and every time the service is
provided.
• 4. Persihability- Unconsumed services cannot be
stored or warehoused
MARKETING PROCESS
• 1. Analyze the marketplace and understand
customer needs and wants- this ensures that
what you will be offering to the market is
something that will be of value to the
customers.
• 2. Design a customer-driven marketing
strategy-involving the use of 4Ps of
marketing.
• 3. Formulate an effective marketing program- a
good marketing program builds demand and
create awareness for new products.
• 4. Build a profitablerelationships ans establish
customers loyalty- Marketers do not just want
consumer who buy from them; they want
consumers who buy from them again and again.
• 5. Capture value from customers in exchange
for the value created for customers- Ultimately,
companies exist to earn profits and maintain
their business.
Pyramid of corporate social
responsibility
• Economic Responsibility- making profit is the
most basic responsibility of a company to its
stakeholders and the society.
• Legal Responsibility- when a company obeys
the laws and observes legal practices, it
produces products that guarantee
consumers’ safety and ensures truthful
practices to its stakeholders.
• Ethical Responsibilty- a company that does
what is right , just, and fair beyond just
following what is dictated by the law, is
practicing its ethical responsibility.
• Philanthropic Responsibility- companies that
strive to give back by contributing resources
to the community or improve the quality of
life of their employees and customers.
 DIFFERENT MARKETING
APPROACHES
MID 19TH TO 20TH 1ST HALF OF 20TH
ERA 1950 TO PRESENT
CENTURY CENTURY

MARKETING PRODUCTION MARKET

SALES ORIENTATION
APPROACH ORIENTATION ORIENTATION

Sell, sell, sell. Use Develop a product

Offer a superior, aggressive selling, that caters to the
FOCUS
innovative product advertising, and needs and wants
distribution tactics. of consumers.
MODULE 2: Assessing Competitive
Advantage
MISSION STATEMENT
• – is a statement of the organization’s purpose
and what it wants to accomplish in the bigger
environment.

Two types of Mission Statement:

1. Product Oriented- a statement focuses on the
product/services.
2. Market Oriented- a statement intended for
satisfying basic customer needs.
EXAMPLE
PRODUCT PRODUCT-ORIENTED MARKET-ORIENTED
MISSION STATEMENT MISSION STATMENT

HOTEL We rent rooms. We delight our guest

every time by creating
engaging expereinces
straight from our heart.
FOOD We sell foods. We produce and market
MANUFACTURER
better value branded
food and beverage
productsfor the greater
mass of consumers.
VISION STATEMENT
• - it is a statement of long term goal.

• Example: To be the number one service

provider in the whole Philippines.
• To become second to no one as a legal drug
operator in Maranding.
MARKETING ENVIRONMENT
• -consists of different components that
affect the company’s abilities to
maintain its position in the market
and to build successful relationship
with customers.
1. Microenvironment
• a. Company Management
• b. Suppliers-provide the resources
and materials needed by the
company.
• c. Intermediaries-are individuals or
entities that help get the products to
the final consumers.
• d. Customers
• Consumer Market-are individuals and households
that buy products for personal consumption.
• Business Market-buys materials for use in
production.
• Reseller Market- buys products for reselling at a
profit.
• Government Market- government agencies that buy
products to provide public service.
• Global Market-consumers from other countries

e. Competitors
f. Publics- any group of individuals that has an actual
or potential interest in the company or its products.
Macroenvironment
• a. Demographic Environment- contains
quantitative in formation on the human
population such as age, gender, income,
religion, educational attainment, and other
statistical data.
Generations are group as
follows:

• 1. Baby Boomers – born post WWII

(Between 1946-1964)
• 2. Generation X – Born between 1965-
1976
• 3. Millennials or Generation Y – born
between1977-2000.
• 4. Generation Z- born after 2000
• b. Economic Environment
• c. Natural Environment
• d. Political Environment
• e. Cultural Environment
Strategic VS Tactical Planning
• Strategic Planning focuses the long
term goals of the company.

• Tactical Planning focuses on short

term actions to achieve the strategic
plan.
SITUATION ANALYSIS
• 1. PEST analysis
• 2. Porter’s Five forces analysis
PEST
• -Political, Environmental,
Sociocultural, and Technological- this
covers the macroenvironmental of
marketing. It helps a company identify
opportunities and threats in four
major areas.
POLITICAL
• How can the next election impact your
business?
• What are the existing laws that directly or
indirectly affects your business?
ECONOMIC
• How stable is our economy?
• Is Inflation affects your business?
• How is the globalization affecting the
economic environment?
SOCIOCULTURAL
• Do consumers have favorable image
of the industry?
• How do religious beliefs and lifestyle
choices affect the population?
TECHNOLOGICAL
• Are the new technologies that the
company can take advantage of?
• Do its competitors have access to new
technologies that can improve their
competitive advantage?
POLITICAL How can the next election impact your business?
What are the existing laws that directly or
indirectly affects your business?

ECONOMIC How stable is our economy?

Is Inflation affects your business?
How is the globalization affecting the economic
environment?

SOCIOCULTURAL Do consumers have favorable image of the

industry?
How do religious beliefs and lifestyle choices
affect the population?

TECHNOLOGICAL Are the new technologies that the company can

take advantage of?
Do its competitors have access to new
technologies that can improve their competitive
advantage?
Michael Porter’s Five Forces
Analysis- analyzing the level of
competition.
• 1. Rivalry among existing competitors-
this measures how aggressive the
competitors within the industry and how
saturated the market is with competitors.
If the company rate this as high, the
competition is intense, and the
competitors are aggressive. Factors to be
considered:
• x Number of competitors
• x Customer loyalty
• x Quality differences
• 2. Threat of substitute product- refers to
the number of other alternative
products that can be used by customers
to replace the company’s product
offering. Factors to be considered:
• x Cost differences
• x Availability of substitute products
• x Convenience of buying substitute
products
• 3. Threat of new entrants- pertains to
the level of ease or difficulty to create a
simple business in the same industry.
Factors to be considered:
• *Time and Cost involved to enter the
market
• *Cost advantages
• *Barriers to entry
• 4. Bargaining power of Buyers-
measures the degree of influence of the
buyer/consumer to lower the product
prices. Factors to be considered:
• *Number of customers
• *Prices Sensitivity
• *Differences between competitors and
how easily and how easily cusomers can
switch to them.
• 5.Bargaining power of Suppliers-
measures the degree of influence of the
suppliers to command higher prices for
their raw materials. Factors to be
considered:
• *Number of suppliers
• *Uniqueness of materials being
supplied.