Marketing Environment and Environment Scanning

Transcription

Marketing Environment and Environment Scanning
MARKETING INTRODUCTION
Marketing is about identifying and meeting human and social needs. One of the shortest
good definitions of marketing is ―meeting needs profitably.‖ The American Marketing
Association offers the following formal definition: Marketing is the activity, set of institutions,
and process for creating, communicating, delivering, and exchanging offerings that have value
for customers, clients, partners, and society at large. Coping with these exchange processes calls
for a considerable amount of work and skill. Marketing management takes place when at least
one party to a potential exchange thinks about the means of achieving desired responses from
other parties. Thus we see marketing management as the art and science of choosing target
markets and getting, keeping, and growing customers through creating, delivering, and
communicating superior customer value.
Peter Drucker, defines There will always, one can assume, be need forsome selling. But
the aim of marketing is to make selling superfluous. The aim of marketing is to know and
understand the customer in a customer who is ready to buy. All that should be needed then is
to make the product or service available.
Marketing Scope
Marketers market 10 main types of entities: goods, services, events, experiences, persons,
places, properties, organizations, information, and ideas.
1. Goods: Physical goods constitute the bulk of most countries production and marketing
efforts.
2. Services: AAs economies advance, a growing proportion of their activities focuses on the
production of services. Services include the work of airlines, hotels, car rental firms, etc.
3. Events: Marketers promote time-based events, such as major trade shows, artistic
performances, and company anniversaries.
4. Experiences: By orchestrating several services and goods, a firm can create, stage, and
market experiences.
5. Persons: Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other
professionals all get help from celebrity marketers.
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6. Places: Cities, states, regions and whole nations compete to attract tourists, residents,
factories, and company headquarters.
7. Properties: Properties are intangible rights of ownership to either real property (real estate)
of financial property (stock and bonds). The are bought and sold, and these exchanges
require marketing.
8. Organizations: Organizations work to build a strong, favorable, and unique image in the
minds of their target publics.
9. Information: The production, packaging, and distribution of information are major
industries. Information is essentially what books, schools, and universities produce, market,
and distribute at a price to parents, students, communities.
10. Ideas: Evert market offering includes a basic idea. Products and services are platforms for
delivering some idea or benefit.
Parties to Marketing
Marketers and Prospects
A marketer is someone who seeks a response-attention, a purchase, a vote, a donationfrom another party, called the prospect.
Marketers are skilled at stimulating demand for their products, but that’s limited view of
what they do. The seek to influence the level, timing and composition of demand to meet the
organization’s objectives. Eight demand states are possible.
1. Negative demand- Consumers dislike the product and may even pay to avoid it.
2. Nonexistent demand- Consumers may be unaware of or uninterested in the product.
3. Latent demand- Consumers may share a strong need that cannot be satisfied by an existing
product.
4. Declining demand- Consumers begin to buy the product less frequently or not at all.
5. Irregular demand- Consumer purchase vary on a seasonal, monthly, weekly, daily, or even
hourly basis.
6. Full demand- Consumers are adequately buying all products put into the marketplace.
7. Overfull demand- More consumers would like to buy the product than can be satisfied.
8. Unwholesome demand- Consumers may be attracted to products that have undesirable
social consequences.
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Markets
The word ―Market‖ is derived from the Latin word ―Marcatus‖ meaning a place where
business is conducted. The different definitions of market are as follows:
―Marketing includes both place and region in which buyers and sellers are in the
competition with one another.‖-Pyle.
―Market, for most commodities, may be thought of not as a geographical meeting place
but as getting together of buyers and sellers in person, by mail, telephone, telegraph or any
other means of communications.‖-Mitchell.
Market Classification
I.
Area based market
1. Family Market: The business transactions are confined to family members and close
relatives, such markets are called family market.
2. Local Market: A market in a village, town, city etc. specify an area for a market and
these are referred to as local markets. This categorization is very meaningful for
perishable goods (agro produce) which have variety of durability from one day to
one year. Local markets are more meaningful for daily used goods.
3. National Market: The products that are used throughout the country are covered by
the national market. Normally industrial goods, consumer goods, facilities etc., are
covered throughout the nation. These goods will have to face completion for price
and quality at national level.
4. World Market: Global marketing involves selling the products outside the country
for which an entrepreneur has to have world class manufacturing and should be able
to complete in quality and price at global standards.
II.
Goods based market
1. Commodity Market: These are the markets specialised based on the goods. Kanpur
is known for Leather goods market and Bangalore is known for Silk Sarees and Silk
Cloth market. Thus various locations and places are identified for different products.
This will mean consumers can get variety of same product in different sizes, volumes
and prices.
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2. Capital Market: The capital is divided as money market, foreign exchange market
and stock exchange market. Nowadays the old method of lending is reduced and
banking sector is doing issue of loan against securities and therefore money market
in the present area is widely distributed. Similarly foreign exchange market is guided
and controlled by RBI and channelized through various nationalised banks.
The stock markets are the places where shares, debentures and bonds are traded.
Bombay, Calcutta, Madras and Delhi are the biggest share markets.
III.
On the basis of Economics
1. Perfect Market: A market is called perfect market if there are large number of
buyers and sellers, prices are uniform, there is freedom for movement of goods and
both buyer and seller are supposed to be having full knowledge of the market. This
speaks of idealistic situation which is rare to be seen in practice.
2. Imperfect Market: Whenever prices are not uniform, there is lack of communication
about price, quality and restrictions for movement of goods the situation is called as
Imperfect market.
IV.
On the basis of Transaction
1. Spot Market: Goods are purchased by paying on the spot and goods are moved
physically to complete the transactions.
2. Future Market: In this case the dealing, despatching and completion of transactions
may take over a period of time. The contract on price and terms is made for a
commodity to be possessed on a future date. This means price is prefixed for a
future purchase which will have to be honoured irrespective of the prevailing rate at
that time.
V.
On the basis of Regulation
1. Regulated Market: Regulated market refers to commodities which are controlled by
statutory rules for price, quantity and region criteria. For a long time in India sugar,
kerosene, gas, rice and wheat were under regulated market.
2. Open Market: Open Market refers to free or unregulated market where there are no
restrictions of any kind for sale and purchase of goods.
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VI.
On the basis of Time
1. Perishable Goods market: Some goods are having very short life and have to be
moved and sold in a very short time. The examples are vegetables, fruits, and milk.
The price is not only determined on the basis of demand but also considering the
duration they have been stored before sale.
2. Shore Period Market: Certain goods have a longer span of life say 1 months to
3months and these have to be stored and sold within that time. Some of the
examples are: pickles, ghee, dalda, fruit jams and food preparations like jamun mix
etc.
3. Long Period Market: This covers goods which can be kept for even upto 1 year and
some more than 1 year. Only care has to be taken for likely damages due to
environment problems, transportation, handling and storage.
VII. On the basis of Volume
1. Wholesale Market: This is a place where goods are transacted in bulk quantities and
mainly such buyers attend these markets. The wholesale markets are located in cities
and big towns. Here again some places are specialised or famous for certain
category of goods.
2. Retail Market: Retail markets are the places like traders, big and small stores where
the goods are directly sold to the consumers.
Marketplaces, Marketspaces, and Metamarkets
The marketplace is physical, such as a store you shop in; the marketspace is digital, as
when you shop on the Internet. Northwestern University’s Mohan Sawhney has proposed the
concept of a metamarket to describe a cluster of complementary products and services closely
related in the minds of consumers, but spread across a diverse set of industries.
Metamarkets are the result of marketers packaging a system that simplifies carrying out
these related product/service activities.
THE EVOLUTION OF EARLIER MARKETING IDEAS
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The Production Concept
The production concept is one of the oldest concepts in business. It holds that
consumers prefer products that are widely available and inexpensive. Managers of productionoriented business concentrate on achieving high production efficiency, low costs and mass
distribution. Marketers also use the production concept when they want to expand the market.
The Product Concept
The product concept proposes that consumers favor products offering the most quality,
performance, or innovative features. A new or improved product will not necessarily be
successful unless it’s priced, distributed, advertised, and sold properly.
The Selling Concept
The selling concept holds that consumers and business, if left alone, won’t buy enough
of the organization’s products. It is practiced most aggressively with unsought goods-goods
buyers don’t normally think of buying such as insurance and cemetery plots-and when firms
with overcapacity aim to sell what they make, rather than make whatthe market wants.
Marketing based on hard selling is risky. It assumes customers coaxed into buying a product not
only won’t return or badmouth it or complain to consumer organizations but might even buy it
again.
The Marketing Concept
The marketing concept emerged in the mid-1950s as a customer-centered, sense—andrespond philosophy. The job is to find not the right customers for your products, but the right
products for your customers. The marketing concept holds that the key to achieving
organizational goals is being more effective than competitors in creating, delivering, and
communicating superior customer value to your target markets.
The Holistic Marketing Concept
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The holistic marketing concept is based on the development, design, and
implementation of marketing programs, processes, and activities that recognise their breadth
and interdependencies. Holistic marketing acknowledges that everything matters in marketingand that a broad, integrated perspective is often necessary.
It provides a chematic overview of four broad components characterizing holistic
marketing: relationship marketing, integrated marketing, internal marketing, and performance
marketing.
(a)
Relationship Marketing
Increasingly, a key goal of marketing is to develop deep, enduring relationships with
people and organizations that directly or indirectly affect the success of the firm’s marketing
activities. Relationship marketing aims to build mutually satisfying long-term relationship with
key constituents in order to earn and retain their business.
Four key constituents for relationship marketing are customers, employees, marketing
partners, and members of the financial community and balance the returns to all key
stakeholders. To develop strong relationships with them requires understanding their
capabilities and resources, needs, goals, and desires.
(b)
Integrated Marketing
Integrated marketing occurs when the marketer devises marketing activities and
assembles marketing programs to create, communicate, and deliver value for consumers such
that ―the whole is greater than the sum of its parts.‖ Two key themes are that (1) many different
marketing activities can create, communicate, and deliver value and (2) marketers should design
and implement any one marketing activity with all other activities in mind.
All company communications also must be integrated. Using an integrated
communication strategy means choosing communication options that reinforce and
complement each other. A marketer might selectively employ television, radio, and print
advertising, public relations and events, and PR and Web site communications so each
contributes on its own as well as improving the effectiveness of the others.
(c)
Internal Marketing
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Internal marketing an element of holistic marketing, is the task of hiring, training, and
motivating able employees who want to serve customers well. It ensures that everyone in the
organization embraces appropriate marketing principles, especially senior management. Smart
marketers recognize that marketing activities within the company can be as important-or even
more important-than those directed outside the company. It makes no sense to promise
excellent service before the company’s staff is ready to provide it.
(d)
Performance Marketing
Performance marketing requires understanding the financial and nonfinancial returns to
business and society from marketing activities and programs. Top marketers are increasingly
going beyond sales revenue to examine the marketing scorecard and interpret what is
happening to market share, customer loss rate, customer satisfaction, product quality, and other
measures. They are also considering the legal, ethical, social, and environmental effects of
marketing activities and programs.
Marketing Mix
Marketing mix is the set of marketing tools the firm uses to pursue its marketing
objectives in the target market.
The Four P Components of the Marketing Mix
McCarthy classified these tools into four broad groups that he called the four Ps of
marketing: product, price, place, and promotion.
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Marketing-mix decisions must be made for influencing the trade channels as well as the
final consumers. The company preparing an offering mix of products, services, and prices, and
utilizing a promotion mix of sales promotion, advertising, sales force, public relations, direct
mail, telemarketing, and Internet to reach the trade channels and the target customers. The firm
can change its price, sales force size, and advertising expenditures in the short run. It can
develop new products and modify its distribution channels only in the long run. Thus the firm
typically makes fewer period-to-period marketing-mix changes in the short run than the
number of marketing-mix decision variables might suggest.
The four Ps represent the seller’s view of the marketing tools available for influencing
buyers. From a Buyer’s point of view, each marketing tool is designed to deliver a customer
benefit. Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ four
Cs.
Four Ps
Four Cs
Product
Customer Solution
Price
Customer cost
Place
Customer
Promotion
Communication
Winning companies will be those that can meet customer needs economically and
conveniently and with effective communication.
Updating the Four Ps
Given the breadth, complexity, and richness of marketing, however-as exemplified by
holistic marketing-clearly these four Ps are not the whole story anymore. If we update them to
reflect the holistic marketing concept, we arrive at a more representative set that encompasses
modern marketing realities: people, processes, programs, and performance.
1. People reflects in part, internal marketing and the fact that employees are critical to
marketing success. Marketing will only be as good as people inside the organization. It also
reflects the fact that marketers must view consumers as people to understand their lives
more broadly, and not just as they shop for and consume products and services.
2. Processes reflects all the creativity, discipline, and structure brought to marketing
management Marketers must avoid ad hoc planning and decision making and ensure that
state-of-the-art marketing ideas and concepts play an appropriate role in all they do. Only
by instituting the right set of processes to guide activities and programs can a firm engage
in mutually beneficial long term relationships.
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3. Programs reflects all the firm’s consumer-directed activities. It encompasses the old four Ps
as well as a range of other marketing activities that might not fit as neatly into the old view
of marketing. Regardless of whether they are online or offline, traditional or nontraditional,
these activities must be integrated such that their whole is greater than the sum of their
parts and they accomplish multiple objectives for the firm.
4. Performance as in holistic marketing, to capture the range of possible outcome measures
that have financial and nonfinancial implications (profitability as well as brand and customer
equity), and implications beyond the company itself (social responsibility, legal, ethical, and
community related).
Marketing Environment:
Competition represents only one force in the environment in which the marketer
operates.
The marketing environment consists of the task environment and the broad
environment.
The task environment includes the immediate actors involved in producing, distributing,
and promoting the offering. The main actors are the company, suppliers, distributors, dealers,
and the target customers. Included in the supplier group are material suppliers and service
suppliers such as marketing research agencies, advertising agencies, banking and insurance
companies, transportation, and telecommunications companies. Included with distributors and
dealers are agents, brokers, manufacturer representatives, and others who facilitate finding and
selling to customers.
The broad environment consists of six components: demographic environment,
economic environment, natural environment, technological environment, political – legal
environment, and social-cultural environment. These environments contain forces that can have
a major impact on the actors in the task environment. Market actors must pay close attention to
the trends and developments in these environments and make timely adjustments to their
marketing strategies.
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Elements of Marketing Environment
Macro Environment
It includes social and cultural factors, technological factors, economic factors, political and
governmental factors, international factors and natural factors.
Environmental protection
received greater attention in order to protect the lives of the people, animals, plants and to
maintain ecological balance.
Social and Cultural Environment:
a. Social
and cultural factors in various countries of the globe affect the international
business. These factors include attitude of the people to work, attitude to wealth, family,
marriage, religion, education, ethics, human relations, social responsibilities etc.
b. Culture:
 Derived mostly from the climatic conditions of the geographical region and economic
conditions of the country.
 A set of traditional beliefs and values which are transmitted and shared in a given society
 A total way of life and thinking patterns that are passed from generation to generation.
 Norms, customs, art, values etc.
Technological Environment:
 A given set of technologies available for the conduct of business determines the
technological environment of business. Technology is the application of science, art and
other fields of knowledge in various activities such as designing tools and equipments,
producing goods and supplying services, communicating information and enhancing
productivity.
 Technological advancements are driving force behind the global developments for
centuries, but they are much more rapid in the present era, making the global environment
highly dynamic and challenging.
Economic Environment:
Economic environment of a country is affected by the economic system, planning
process, economic structure, business fluctuations, trends in macroeconomic variables,
economic policies and international economic environment.
These various constituents of
economic environment are detailed as follows:
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a. Economic System:
 It is a set of institutions, principles and mechanisms created by a society to facilitate
economic units to address their basic economic problems of allocation of scarce
resources and perform their basic economic activities. Every organised society follows
some or the other economic system.
 On the basis of ownership of resources, economic systems are classified into capitalism,
socialism and mixed economies.
Whereas on the basis of market mechanism, the
systems are classified as market economies, planned economies and mixed economies.
b. Planning Process:
Planning is needed for an efficient allocation of resources, which are limited in supply,
among alternative uses. The planning process is an integral part of communist and socialist
states. However, retaining their basic free market structure, even capitalist economies use
planning to some extent. At present, all countries have mixed economic systems and follow
planning, to a smaller or greater extent, to stimulate the level of investment, encourage
technological innovations, use the resources as per national priorities and evolving
economic situation, and reconcile the process of economic growth with the overall
socioeconomic development of the country.
c. Economic Structure:
Economic System defines the institutional framework, whereas economic structure defines
the physical framework under which an economy and business units operate. The economic
structure is determined by the factors such as total population size, per capita income,
demographic profile, factor endowment, technological advancement, and is reflected in the
sectoral composition of output and employment, fiscal, financial and trade structure, and
population structure.
d. Business Fluctuations and Cycles:
Countries, world over, face wide cyclical fluctuations in output, prices, employment, and
other macroeconomic variables due to the fluctuations in various components of aggregate
demand and supply. Business fluctuations are recurrent, occur around a long-term growth
and of short duration, but without a fixed periodicity. There are broadly three approaches –
conventional business cycles, growth cycles and growth rate cycles that are used for
measuring these fluctuations.
Legal Environment / Political Environment:
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The functioning of a company impacts its internal stakeholders such as shareholders,
managers and workers as well as external stakeholders such as suppliers, consumers and the
community at large.
organisation.
Different stakeholders have different interest in the working of an
At times, these interests may conflict with each other.
For example, textile
industry, trying to maximize its profit, may not internalize the cost of pollution of the nearby
water bodies where its used chemicals are discharged.
Such discharges may affect the
livelihood of those who are dependent on marine life for their earnings. Hence, world over, the
governments enact laws to resolve conflicting interests and minimise the harmful impacts of the
functioning of companies.
Demographic Environment:
Demographic environment is determined by population size, density, age composition,
gender composition, occupation pattern, education level, family size and structure, and many
such attributes of the population.
Demographic environment affects both demand and supply sides of a market. It affects the
demand side as human beings are consumers of most of the products sold in a market. The
total size of the population affects the total demand for a product, whereas many other
attributes of the population such as age and gender composition and economic stratification
affect product mix. For example, age composition in favour of the child population creates
demand for educational material, toys and baby products. Similarly, gender composition in
favour of females signifies that there is a likelihood of more demand for cosmetic and other
products demanded by the female population. On the supply side, population size, migration
and mobility, and age structure determine the supply of labour, which is an important factor of
production, whereas education profile affects the labour quality and productivity.
Natural Environment:
It consists of all natural resources such as raw material, and energy sources such as
water, air and climate. The business has two way relationships with the natural environment.
First of all, natural environment is a source of many raw materials of almost all business
organisations. A region, prosperous in the natural environment, can provide natural resources
in abundance and at a cheaper rate; and thus, becomes attractive for business units.
For
example, in the recent period, many multinational organisations are attracted towards the
African Continent primarily because of its natural resource abundance.
Second, natural
environment itself is affected by business activities adversely. Often, in their drive to maximize
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profit, business units exploit natural resources without bothering about the environmental
damage their activities may be causing.
The damage is not only due to the unhindered
extraction of natural resources but also due to emission of hazardous pollutants in the air and
discharge of toxic waste in the water. Environmental damage is not only harmful for human
beings but also for other sources of life.
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Macro Environment
Social and Cultural Factors
Micro Environment
Technological
Factors
Economic
Factors
Political
Factors
Demographic
Factors
Natural
Factors
Market
Intermediaries
Customers
ALL STAKE HOLDERS
Public
Suppliers
Bankers &
Financial Institutions
Competitors
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Micro Environment
It includes competitors, customers, market intermediaries, suppliers of raw materials, bankers
and other suppliers of finance, shareholders, and other stakeholders of the business firm.
1. Public:
It consists of all those parts of society which can directly or indirectly influence an
organisation’s ability to achieve its objectives.
Public opinion is important for a
company as it can either strengthen or weaken its brand image. For example, satisfied
customers are a public that spread good image about the products through word of
mouth. On the contrary, activist, consumer forums, non-government agencies and even
media protesting against the environmental damage done by a company is a public that
can tarnish the image of a company, and weaken its brand image. Thus, managing
public opinion is a crucial task for any company.
2. Suppliers:
They are the agents who supply inputs, such as raw materials and intermediate goods to
an organisation. They play an important role in operational efficiency. A delay in the
supply of inputs can delay all the subsequent operations and the firm may fail in timely
delivery of its products to customers, resulting in consumer dissatisfaction and even
losing them forever. Therefore, managers need to assess the ability of suppliers for their
ability to supply inputs in the required quantities in a given time frame.
3. Bankers and Financial Institutions:
Financial Intermediaries include bank insurance companies and credit agencies that help
companies raise finance as well as insure against various types of risks involved in
production and other business operations.
4. Competitors:
Competitors are rivals who compete with an organisation in the market place. Except
monopoly market structure, firms in all other market structures have one or more
competitors for their products. As the number of competitors increases the competition
becomes intense. Competitors not only compete for customers but also for talented
staff. To prevent customers and employees from shifting to the competitors, a company
needs to continuously assess consumer taste and preferences, and design the products
accordingly. It also needs to design retention strategies so that the talented staff can be
retained for a longer time.
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5. Market Intermediaries:
Marketing Intermediaries consists of service agencies and financial intermediaries.
Service agencies include marketing research and consultancy firms, advertising
agencies and media firms.
These agencies help consumers identify the target
population and market products in most efficient and influential manner.
6. Consumers:
Consumers comprise individuals and households that buy goods and services for
personal consumption. Consumers are the most important constituents of the micro
business environment as they are the demand side of the market.
Without them
companies cannot do their business. Identifying customer needs, retaining customers,
and extending products and services to them throughout their lives are important
challenges for business organisations.
Marketing Environment Analysis:
It is the assessing of opportunities and / or threats that are present in the environment
and can significantly affect the business organisation.
A firm gathers relevant information
relating to the environment, studies them in detail, takes note of changes in each factor that is
constituting the environment and forecasts the future course of action for the organisation.
SWOT Analysis:
The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats
is called SWOT analysis.
External Environment Analysis (Opportunity and Threat Analysis):
In general, a business unit has to monitor key macro environment forces (demographic
economic, technological, political-legal, and social-cultural) and significant (microenvironment
actors (customers, competitors, distributors, suppliers) that affect its ability to each profits. The
business unit should set up a marketing intelligence system to tract trends and important
developments. For each trend or development, management needs to identify the associated
opportunities and threats.
Market Opportunity:
A major purpose of environmental scanning is to discern new marketing opportunities.
A marketing opportunity is an area of buyer need or potential interest in which a company
can perform profitably.
Identification of market opportunity is critical before the management of a firm takes a
decision to launch or diversify in any product area. It involves an analysis of the following:
1. Demand Conditions / Demand Analysis
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2. Market Segment / Segmentation Analysis
3. Industry Analysis
4. Competitor Analysis
1. Demand Conditions / Demand Analysis:
The core aspect of market opportunity analysis is demand analysis. The market consists of
existing and potential buyers. It is important that these individuals should not only have the
desire to buy, but also the means to buy a product / service. This implies that the market
demand will come from only those customers who have the willingness and purchasing
power to buy a product or service at a given price level.
2. Segmentation Analysis:
Segmentation is the process of dividing the market into homogeneous subunits.
Homogeneity in the market is brought about on the basis of the demographic, geographic,
and psychographic characteristics of consumers. Besides, this is also brought about on the
basis of product usage. Dividing the market into segments helps the firm to sharply focus
its attention and also examine the viability of satisfying market demand.
3. Industry Analysis:
 The way an industry is structured also affects the size of the market and, in turn, the market
opportunity. To analyse the industry, Michael Porter, in his book, Competitive Advantage,
mentions that barriers to entry and exit of firms and also intensity of rivalry in the industry
must be examined.
 Besides the above analysis, the firm also needs to study industry trends during the time
period covered by the market opportunity analysis (MOA). Information to be looked for is
industry growth rate in terms of sales, production, return on investment (ROI), and so forth.
Industry analysis should also identify common practices characterizing the entire industry.
4. Competitor Analysis:
Analysis of competition and how well the market is serviced tells us if the market is attractive
enough to enter. For example, if a market is well served and customers are satisfied with
what they are getting, then very little opportunity exists for any new entrant. In short,
dissatisfaction with a competitor’s products and services provides an opportunity for a firm
to enter the market and make profits.
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