The important question for a firm is "Who are our customers?"
Hence, the first logical step in strategic market planning is to analyse the customer, i.e.,
to understand customer motivation, their unmet needs and how they can be segmented.
Customer Segmentation
Who are the biggest customers?
Who are the most profitable customers?
Who are the potential customers?
How could we segment the customers into unique strategic business groups?
Customer Motivation
What benefit offered by the product/service do customers value most?
What are the customer's actual buying objectives, i.e., what needs do they want to
What are the customer's motivational priorities?
What changes are taking place in the customer's taste and preferences?
Customer motivation analysis starts with the task of identifying motivations for a given
segment and then to determine the relative importance of the motivations. Ultimately we
have to identify the motivations that will play a role in defining the strategy of the business.
Price Sensitivity of Customers
There is a well-defined breakdown between those customers who are first concerned
about price and others who are willing to pay extra for higher quality, better features and
superior performance. Automobiles span the spectrum from Maruti to Mercedes. Airline
service is partitioned into first class, business class and economy class. In each case, the
segment dictates the strategy.
Unmet Needs
An unmet need is a customer need that is not being met by the existing product offering.
Unmet needs are strategically important because they represent opportunities for firms
to increase their market share, break into a market, or create new markets. Sometimes customers may not be aware of their unmet needs because they are so accustomed to the implicit limitation of the existing equipment. Unmet needs that are not obvious may be more difficult to identify, but they can also represent a greater opportunity for an aggressive business because there will be little pressure on the established firms to be responsive. The key is to stretch the technology or apply new technologies in order to expose unmet needs. For example Palm-top computers, blood-less operation, and commercial space travel are some of the examples of once unmet needs that have been met.
"Nothing focuses the mind better than the constant sight of a competitor who wants to
wipe you off that map" said Wayne Calloway, former CEO of Pepsi Co.
“Who really are our competitors?"
Is a tour operator is competing with a male outfit supplier? Is a business school competing
with an insurance company? May be, the answer is yes, if we consider all of them to be
fighting for a share of the consumer's purse.
So, the competitor analysis is the second phase of external analysis, in order to gain
insights that will influence the product- market investment decision. The analysis is focused
on identifying threats, opportunities or strategic uncertainties created by emerging or
potential competitor moves. Competitor analysis starts with identifying current and potential
competitors. After competitors are identified, the task is to understand them and their
strategies, i.e., to analyse their strengths and weaknesses and strategic groups of
"Imaging the future may be more important than analysing the past. I daresay companies
today are not resource-bound, they are imagination-bound", says, C.K. Prahalad, University
of Michigan Market analysis builds on customer and competitor analysis, its objective being to determine the market response to current and potential participants and also to understand the
dynamics of the market.
The organization's performance in the marketplace is significantly influenced by the
following three factors:
The organization's current market position, how well it has positioned itself
The nature of environmental opportunities and threats
The organisation's resource capability to capitalize on the opportunities and its ability
to guard itself against threats. Faced with a constantly changing environment, each business unit needs to develop a marketing information system to track trends and developments, which can be categorised as either opportunities or threats. The company has to review its strength and weakness against the backdrop of environmental opportunities and threats, i.e., to perform a SWOT analysis for the organisation.

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