03 MM21c4

© Noel Capon, 2016. All rights reserved.
PRESENTATION 3 OF 26 / 1
CHAPTER 3
Market Insight
OPENING CASE: NETFLIX

Chapter Roadmap
© Noel Capon, 2016. All rights reserved. PRESENTATION 3 OF 26 / 2
What is Market Insight?

Market and
Market Structure Industry Forces Environmental Forces (PESTLE)
Product Evolution
The Market The Family of Life Cycles Current Direct Competitors Political
Products Serving the Market Product-Form Life Cycles New Direct Entrants Economic
The Firm’s Products Indirect Competitors Sociocultural
Factors Affecting Market Size Suppliers Technological
Buyers Legal/Regulatory
Environment (Physical)
Interactions among PESTLE Forces
The Managerial Process Environment
Insight for Strategic Marketing
Market Insight
Customer Insight Competitor

Company Insight
What Is Insight?
Source: Impact Planning Group, by permission

Market Insight
Market insight is critical for:

• Anticipating market changes
• Identifying potential opportunities
• Opportunity sizing
• Identifying areas to differentiate from competitors
• Laying a foundation for developing the market strategy
Market Insight
Core Focus
• State of nature
Example: What competitors does the firm face now?
• Trends
Example:What competitors will the firm face in three years?
What trends are affecting the industry?
What will be their impact on the firm?
Building Blocks for Securing Market Insight
Define the market Assess how products

and markets are evolving
Good market insight

leads to better
opportunities
Competitive and supply-chain PESTLE – Impact the firm

pressures of each market and other industry players
Market Structure
• Market definition
A market comprises customers — people and organizations — who require
products and services to satisfy their needs … and have sufficient purchasing
power – and interest to buy what firms are offering.
• Market size factors
• Population size and growth
• Population mix
• Geographic population shifts
• Income and income distribution
• Age distribution
• Beware marketing myopia
Market Structure
Definitions and Distinctions

Product class: A group of products offered by competing suppliers that
serve a subset of customer needs in a roughly similar
manner.
Product form: Several product forms comprise each product class.
Products within a product form are more similar in how they
meet customer needs than products in other product forms.
Product line: A group of related products that a single firm offers.
Product item: A subset of the product line that is uniquely identified.
Market Structure
Hierarchical Decomposition: Illustration – Entertainment Market

Market Structure
Market and
Product Evolution
Market Insight
Environmental Forces Industry Forces

Market and Product Evolution
Life Cycles
• The life-cycle framework is a good vehicle to explain market and product evolution.
• Life cycles help firms understand and predict market conditions.
• Five life-cycle stages are: introduction; early growth; late growth; maturity, decline
• Life cycles require a long-term view of demand.

Life-cycle Stages
Life-cycle Stages
• Introduction — Products are new; suppliers struggle to build profitable volume (failed
pioneer Apple Newton led to BlackBerry and iPad).
• Early Growth — High growth and high profit margin. Examples: hybrid cars, tablet
computers.
• Late Growth — Many product and supply chain uncertainties resolved; sales increase
but growth rate slows. Firms seriously differentiate products from competitors — aka
competitive turbulence.
• Maturity — Slow growth — most sales to repeat/loyal customers. Examples: FMCGs
like detergents, milk.
• Decline — Sales turn down; decline can be fast or slow. Overcapacity leads to price
competition.
Life-cycle Stages
• The product life cycle has many limitations

• Most successful products never die
• The product life cycle really refers to the life of
a product/market, industry, sector, or product
category—not to specific brands or firms
Life-cycle Stages
Life-cycle Stages
Maturity
Concentrated
fragmented
Sales and Profit Margin Life Cycles

Market and
Market Structure
Product Evolution
Market Insight

Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Entrants Competitors
Competitors
Complementers
Buyers
Industry Forces
Direct Competitors
• Traditional direct competitors — offer similar customer benefits from similar products
as the firm offers; differential advantage may be difficult to achieve.
• Acquisitions and divestitures — If a competitor acquires a competitor firm/business

unit.
• Mergers — Two entities combine as equal partners to create a stronger competitor by

pooling strengths and reducing risks.
• Private equity — Cut costs and become more competitive.

Industry Forces
New Direct Entrants — enter from a different arena; offer similar

products and services
• Firm employees — potential threat as competitors
• Geographic expansion — strengths in different geographies
• Networks — group of firms collaborate and pool resources (21 st centaury enterprise)
• New sales and distribution channels — like online presence; Alibaba.com
• Startup entry — flexibility; lack of legacy issues can provide an edge
• Strategic alliances — can strengthen two individual firms by combining resources
Market and
Market Structure
Product Evolution
Market Insight

Environmental Forces
PESTLE
P – Political
E – Economic
S – Sociocultural
T – Technological
L – Legal/Regulatory
E – Environmental (physical)
Sociocultural
• Cultural and subcultural groups
• Localization and globalization
Technology: Select innovations since World War II

Technological
• Sustaining technologies: improve performance for current products on
dimensions existing customers value
• Disruptive technologies: bring new and very different value propositions
• Firms often ignore or reject disruptive innovations
• inferior performance
• firm rewards – potential cannibalization
Industry Forces
Suppliers
Current Direct
New Direct Indirect
The Firm
Entrants Competitors
Competitors
Complementers
Buyers
The Augmented Industry Environment

Market Insight
One Final Item

• The managerial process environment: concepts, framework, ideas, and tools
to lead and manage organizations
The Managerial Process Environment
experience curve benchmarking

core strategy
value chain
product portfolio
best-practice sharing
six marketing core competence
imperatives
brand equity
marketing audit
re-engineering
synergy
balanced price waterfall
scorecard
key account
management positioning

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© Noel Capon, 2016. All rights reserved.

OPENING CASE: NETFLIX

What is Market Insight?

Customer Insight Competitor

Source: Impact Planning Group, by permission

Market insight is critical for:

Define the market Assess how products

Good market insight

Competitive and supply-chain PESTLE – Impact the firm

Definitions and Distinctions

Hierarchical Decomposition: Illustration – Entertainment Market

Environmental Forces Industry Forces

• Life cycles help firms understand and predict market conditions.

• Life cycles require a long-term view of demand.

• The product life cycle has many limitations

Sales and Profit Margin Life Cycles

Environmental Forces Industry Forces

• Acquisitions and divestitures — If a competitor acquires a competitor firm/business

• Mergers — Two entities combine as equal partners to create a stronger competitor by

• Private equity — Cut costs and become more competitive.

New Direct Entrants — enter from a different arena; offer similar

Environmental Forces Industry Forces

Technology: Select innovations since World War II

The Augmented Industry Environment

One Final Item

experience curve benchmarking

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