Market Analysis

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Market Analysis
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Background

• Marketing plans cant but put together without
  some form of analysis
• How do I match my companys assets with good
  business opportunities?
• Possibilities markets
• market analysis
• finding and measuring business opportunities
• targeting and dividing market into niches
• suggesting product placement and position in mind
  of consumer

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Market Analysis

• marketing requires a great deal of information
  about consumer needs
• marketing research gives the marketing manager
  data needed to make decisions
• required because managers are often hundreds or
  thousands of miles distant from end users
• market analysis is the only way firms can stay in
  touch with customers and their needs

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Discovering Opportunities

• most large firms are moving away from mass
  marketing to target marketing
• mass marketing production approach of looking
  at what most consumers want, assumes actions of
  all consumers are equal
• mass marketing mass production (low-cost,
  effective, easy), disposal of production
• problem always leaves someone unhappy

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Discovering Opportunities

• target marketing consumer needs set the product
  characteristics and marketing programs
• production efforts change to meet needs of
  targeted groups of consumers
• example you grow grouper, but find out that
  processers want a variety of different sizes,
  species. You then become flexible to meet their
  needs (same holds true for processors, their
  market)
• special needs more sales, higher sales prices

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Discovering Opportunities

• target marketing more costs, difficult to manage,
  but profitable to producer and pleasing to
  customer
• goal market edge because you offer what others
  cant
• from the market analysis standpoint, a market is
  group of current or possible consumers with
  similar unmet needs and buying power
• defined in terms of consumer needs and not the
  product being sold!

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Discovering Opportunities

• problem consumer needs change slowly, products
  come and go
• example old-style TV dinners vs microwaveable
  grouper Florentine
• problem cant please everyone on a global basis
  ? think regionally or locally!
• target marketing recognizes differences in needs
  for seafood, there are well-defined regional
  likes and dislikes
• how can you possibly fill all the different needs
  in a profitable manner (you cant)

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Consumer Demographics

• within a defined area, the needs of consumers are
  often found to be similar
• that is, after having divided them into groups
  according to common descriptions (e.g., age, sex,
  household size, level of income, level of
  education, marriage status)
• demographics dividing consumers into groups for
  easy identification
• helps establish more specific consumer needs
• information easily obtain for smaller vs. larger
  areas

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Consumer Demographics

• by tying consumer needs to demographic info it is
  possible to find special groups of consumers
  w/special needs (i.e., the target)
• research begins with listing consumer needs,
  advantages, benefits sought, likes, dislikes
• must be fairly specific, but not related to a
  currently-existing product (e.g., flavor vs.
  texture)

Group 1
Group 2
flavor (sweet to bitter)
Group 3
texture (soft to tough)
mass marketing would target dashed circle
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Consumer Demographics

• The previous example indicates that three
  separate products might be required
• products must be significantly different
• large enough potential customers in each group
• customers must be reached by promotion
• needs must be long-lasting to make it worthwhile
• This determines your ability to segment a market

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Segmentation Marketing

• select the product and market area
• determine all the needs that future customers
  might have in the product and market area
• form at least three different market segments
• find out what characteristics of the product of
  the product affect the buy decision of the
  consumer
• give a name to each product market segment
• describe each segment with demographic and other
  possible consumer-related information

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Determination of Marketing Goals

• After segments have been established, match these
  results to your marketing goals
• what are your goals wrt this (these)
  product(s)(i.e., promotion or penetration)
• product development new or improved version
  (microwaveable vs. frozen block)
• market development motivating people to buy the
  product (healthy vs. saturated fats)
• product diversification adding products to the
  product line (4 oz. fillets in garlic/lemon or
  Cajun spice)

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Determination of Marketing Goals

• One way to study the market and marketing goals
  is to look at the chances or possibilities for
  market growth and projected market share
• identifies the best and worst products a firm has
  to offer
• Goal blend of stars and cash cows

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Question Marks
Stars
Annual Market Growth Rate ()
10
Cash cows
Dogs
0
10
1
0.1
Market Dominance
Source Seperich et al., 1994
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Estimation of Market Potential

• There are several methods of guessing or
  estimating possibilities in a market
• market possibilities total number of sales
  possible in a target market for all producers
• sales forecast level of sales expected for a
  single firm within the target market
• market share percentage of total sales gained
  by a single firm (SF/MP)

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Estimation of Market Potential

• Step 1 determine market potential
• Methods factor approach vs. demographics
• Factor approach uses a series of factors to
  discover the size of possible market sales for a
  specific product to achieve the sales forecast
• requires gathering information about product
  usage and consumers

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Example of Forecast Approach

• presents sales as a percentage of some
  easily-obtained industry statistic (e.g., gross
  domestic product, retail sales)
• then estimates the firms proportion of total
  industry sales, work your way down
• GDP 3 trillion
• total retail sales of food is 15 of GDP (3
  trillion x 0.15 450 billion
• supermarkets (retailers) that buy seafood sell
  12 of national retail food sales (450 billion x
  0.12 54 billion)
• 0.5 of their sales are as seafood (54 billion x
  0.005 270 million
• 15 of this is as grouper (270 M x 0.15) 41
  million

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Another Way demographics or consumer-side
forecast

• if demographics show that people who would buy
  glow-in-the-dark grouper are highly educated,
  men, have high incomes, live in cities, live in
  the SW portion of the U.S. and are between 45 and
  60 years old you can estimate size of the
  market
• population of the U.S. 290 million
• males is 50 145 million
• urban is 40 58 million
• in SW is 20 11.6 million
• educated is 25 2.9 million
• with high income is 25 725,000
• 45-60 yrs of age is 10 72,500

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Another Way demographics or consumer-side
forecast

• Result 72,500 customers would buy
  glow-in-the-dark grouper
• If each consumes two pounds of grouper per month
  24 lbs/yr/customer x 72,500 customers 1.75
  million lbs
• If your market research via interviews indicates
  20 customers would become regular consumers of
  GITD grouper, your sales forecast for the first
  year is 350,000 lbs of GITD
• At 10/lb, your sales forecast in is 3.5
  million

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For next time...
SEAFOOD MARKETING