Paper: Marketing Analysis Toolkit

1. 5 C’s analysis: five dimensions of the market environment crucial for making decisions
(customer, context, company, collaborators, competition)

Analyzing Customers: understanding customer’s needs and preferences

● Problem recognition: understand how, when, where the customer’s needs arise
● Informaiton search: sources of information used to learn about available options
● Evaluation of alternatives: whic features are most important
● Purchase decision: where do customers go to purchase the product
● Post purchase evaluation: how to assess if they’ve purchased the right product

Analyze the Context: understand how factors in the world affects the business model
● Demographic environment
● Economic environment
● Socio-cultural environment
● Political/Legal environment
● Technonological environment
● Natural environment
Translate the data into strategic implications to understand the opportunities and challenges
presented by the external context

Analysis of the Company:

● Business model and competitive strategy:
○ What fundamentally does the company do and how does it make money
○ What is the engine that makes the business run
○ Firms compete by 1) cost 2) uniqure benefits 3) focus on niche market
● Competitive advantage analysis:
○ Something the company does and competitors can’t match
○ Sustainable competitive advantage persists over time
○ The things the firm does well (core competencies) can help outline the
assets/captial of the firm

Collaborators and complementors:

● Collaborators: companies/people that help market the product to customers (suppliers,
disti, retailer, influencer..)
● Complementors: companies/people that benefit when the company sells its products
(other companies who sell complimentary products)

Competitor analysis:
● Identify and analyze firms that offer similar products or alternative solutions to
consumer’s needs

After looking closely at the 5 C’s, you need to dive deeper into the dynamics of the industry in which you
compete →
 2. Porter’s Five Forces (PFF): the five forces create the profitability potential for the
industry and firms competing
(industry competition, potential entrants, substitutes, buyer power, supplier power)
● Industry competitors: less competition is generally better for firms. Focuses on industry
competitiveness as a whole rather than individually
● Potential entrants: high entry barrier and low cost of exit is good
● Availability of substitutes: consumers can easily shift their demands from you to them,
only the most cost efficient firm makes a profit
● Buyer power: firms who face buyer power have less price flexibility
● Supplier power: forces you to pay higher prices which raises the cost structure
Potentially all of these forces dictate the profitability of the industry and firm.

3. SWOT analysis: The goal of a SWOT is not to only make a list like done in 5 C’s and
Porter Fiver Forces, but to pinpoint the most significant, pressing strategically important
internal and external conditions facing the business.
External (things the firm can’t control)
Opportunities: summarize favorable trends or developments in the external environment to
increase sales or profit. Take advantage of them to move firm forward.
Threats: recognize factors that impede business performance and plan around them. Increase
in competition, decrease in customer desire, etc…

Internal (things under the firm’s control)

Strengths: resources that can be used to take advantage of opportunities
● Focus on those strength that ar customer relevent and distinctive competence
compared to competitors
Weaknesses: capabilities inferior to the competition
● Firm should improve capabilities that are valuable to it’s customers
● Address required competencies just to stay in the game
● Improving distinctive competencies to move ahead of competition
Ongoing market scanning: after tha baseline has been established, this is an ongoing activity
to understand how things internal/external are changing.
Marketing Decision Making using all the above:
● Market segmentation and target market decision: 5 C’s (customer + competition) to
choose unique profitable market
● Brand decision: 5 C’s (company + competition) to assess company’s brand strength &
weakness vs others
● Positioning decision: 5C’s (company + competition + customer) to evaluate positioning
statements. Own competencies, parity and differentiation, what customer’s value.
● Product decision: 5 C’s (company + customer) what the company is good at against
what the customer values
● Pricing decision: PFF to determine industry competitiveness and price points
● Distribution decisions: PFF buyer power + 5 C’s complementer
● Promotion decision: 5 C’s customer indicates when, where, how to communicate
Paper: Porter’s Five Forces
Awareness of the five forces can help a company understand the structure of its industry and
stake out a position that is more profitable and less vulnerable to attack.

Threat of Entry
● The threat of entry depends on the height of the entry barrier present and the reaction
expected from incumbents.
● If barrier is low and retaliation from incumbents is minimal, the threat of entry is high.
● The threat of entry, not whether entry actually occurs which decreases profitability
Barriers to entry
1. Supply side economies of scale
2. Demand side benefits of scale
3. Customer switching cost
4. Capital requirements
5. Incumbency advantages independent of size
6. Unequal access to distribution channels
7. Restrictive government policy
Expected retaliation: how potential entrants expect incumbents to react

The power of suppliers (e.g. Microsoft)

A supplier group is powerful if:
● More concentrated than the industry it sells to (microsoft)
● Doesn’t depend heavily on the industry for it’s revenues
● Industry participants face switching costs for changing suppliers
● Supplier offers products that are differentiated (e.g. special drugs)
● There is no substitute (pilot’s union)
● If they can threaten to integrate forward

The power of buyers

A customer group has nego leverage if:
● There are few buyers who purchase in volumes (telecom)
● Industry products are standardized or undifferentiated
● Low switching cost to change vendor
● They can threaten to integrate backwards, make the product themselves
The buyer is price sensitive if:
● They earn low profits, strapped for cash… cash-rich customers are less sensitive
● The quality of the buyers product/service is little affected by the product
● The industry product has little effect on the buyer’s other costs
Other factors:
● Intermediate customers (e.g. distributors) can be analyzed as other buyers
● Poducers can attempt to bypass channel clout by advertising downstread (DuPont)
● Buyer power applies equally to consumer and B2B
The threat of substitutes:
The threat of substitute is high if:
● Offers an attractive price-perfromance trade off (long distance vs skype, rental vs netflix)
● Cost of switching is low (generic drugs)
E.g plastics as a substitute for steel in car manufacture
Rivalry among existing competitors
The intensity of rivalry is greater if:
● Competitors are numerous or equal in size and power
● Industry growth is slow (only market share growth is possible)
● Exit barriers are high (flip of entry barriers)
● Rivals have high commitment to the business (e.g. state-owned,
Price competition is most likely to occur if:
● Products or services are nearly identical
● High fixed-cost, low marginal-cost
● Capacity must expand in large increments to be efficient
● Product is perishable (tomatoes, old technology, ..)
Other points:
● Price competition transfers profits directly from an industry to customers
● Competition on dimensions other than price - feature, support, delivery - is less likely to
erode profitablity, but can actually justify higher prices because it provides customer
value
○ Such rivalry can even raise the barrier to new entrants
● The opportunity for positive-sum competition is greater in industries serving diverse
customer groups
● How to shift competition in a more positive direction?
Factors: to be understood through the lens of the five forces, but they are not a “sixth force”
● Industry growth rate: not always an indication of profitable growth
● Technology and innovation
● Government
● Complementary products/services: compliments are profitable through the way they
affect the 5 forces
Changes in industry structure: the 5 forces provide a framework for identifying the most
relevant industry developments and impact on attractiveness
● Shifting threat of new entrants
● Changing supplier or buyer power
● Shifting threat of substitution
● New based of rivalry (eliminating rivalry is a risky strategy)

Implications for strategy: understanding 5 forces is the starting point for developing strategy
● Positioning the company
● Exploiting industry changes
● Shaping industry changes
● Defining the industry