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TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 1
TAM302Engineering Design Principles
Syllabus Topic: Customer Requirement Driven Design & Competitor Analysis
Market Analysis
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 2
• Understand the Market and it’s Potential
Research Trends - General & specific market forecasts
• Set Some Realistic Marketing Objectives Unit sales, revenue, profit objectives etc.
•Develop Marketing/Product Strategy
Identify potential Target Market, Competitive Tactic, Market Position, Segment and its size, & Differentiation.
Market Analysis for Product Design Teams
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 3
Presto• Marketing driven company: Product development • Small family-owned mid-west company• Kitchen Products: very competitive market (with many large-company competitors)
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 4
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 5
Market Potential:Industry TrendsEx: Sporting and Athletic Goods
19921991199019891988198719865100
5200
5300
5400
5500
5600
5700
Sal
es R
even
ue
($m
illi
on
)
8.9%0.7%
-2.1%
-3.0%(predicted)
Data: US Industrial outlook 1991
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 6
Situation Analysisto estimate potential and to Set Objectives
850,000 people buy an average of 10 disposable razors each month.
Survey indicates that 1 in 100 would immediately move over to new cartridge type if available.
Estimated market potential = 850,000 x 10 x 0.01 = 85,000 per month
Objective: Be selling 80,000 per month by end of first year
Realistic objectives can only be derived from the results of your market analysis
Example:
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 7
Sales Forecasting:Existing Products
• Mechanical Extrapolations: extend
historical data into the future; moving averages or least squares (may miss turning points)
• Analytical Methods: regression analysis or
logarithms to predict based on trend analysis
• Jury of Executive Opinion
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 8
Sales Forecasting:New Products
Consumer Surveys & Focus Groups Substitute Method: Estimating replacement
potential (e.g. based on % of existing consumers who would switch)
Test Markets: expensive but reliable; place the product on the market on a limited basis
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 9
Marketing Objectives
The marketing objectives are the qualitative and quantitative goals based on data gathered from the market analysis. The objectives become the basis for the development of the marketing strategy.
Example: One year's marketing plan for one of Gillette's fastest growing products:• Achieve a 20% market share of the cartridge razor market
• Achieve a profit contribution of 43%
• Retain pegboard space at checkout counters
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 10
Direction: "If you don't know where you are going any road will get you there" - answers basic question: "Where do we want to go?"
Standard of Evaluation: performance yardstick
Management by objectives (MBO) proven over: • MBC (crisis): reactive rather than proactive• MBS (subjectives): 'do your own thing the best way you know how' (manage)• MBE (extrapolation): 'if it isn't broken don't fix it' - 'has done o.k. for us up to now'• MBH (hope): 'If you try hard enough and long enough things will work out o.k.'
Why Define Marketing Objectives?
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 11
Guidelines for GoodMarketing Objectives
• Clear & concise statements• Name specific results in key areas• Specify the period• Use measurable terms• Product objectives should be
consistent with organizational objectives
• Make objectives challenging• Make objectives attainable
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 12
Key Areas forMarketing Objectives
1. Revenue ObjectivesBasic measure of the level of activityState as % or total number
'Achieve an increase in sales'
'Increase sales next calender year from $850,000 to $1.5 million'
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 13
Key Areas forMarketing Objectives
2. Profit ObjectivesTakes into account costs of meeting revenue objectives. State as total net profit or % increase:
'Our objective is to maximize profit'
'Generate a 15% increase in profits by the end of 1995
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 14
Key Areas forMarketing Objectives
3. Customer ObjectivesServe as enabling objectives in determining sales and profits; represent direction for promotional aspects of marketing and product design. Should be stated in objectively measurable terms:
'Increase customer goodwill'
'Have at least 85% of our customers rate us as "best" in the area in our 1993 annual survey'
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 15
Assembling and allocating the resources necessary to achieve a company's marketing objectives with emphasis on competitive opportunities, costs, and time. The result of blending of the 4 p's: The product - to be offered The place - distribution of the product The promotion - communicate to pot.customers The price - charged for the product
Three types: 1. Market targetting,2. Competitive strategy, 3. Positioning strategy
Marketing StrategyStrategy needed to accomplish objectives
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 16
Model T
Model T
Model T
Model T
Model T
Model T
Model T
Model T
Granada
Mustang
Fairmont
Lincoln
Mercury
Fiesta
Volkswagen Bug
From: Marketing Planning Guide, Stevens et al, publ. by the Haworth Press
Undifferentiated(aggregation)
Multi-Segment(part of aggr. mkt.)
Focused(concentration)
Market Targeting
Decision process and activities conducted to identify a market to serve
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 17
Adapted from: Marketing Planning Guide, Stevens et al, publ. by the Haworth Press
CompetitiveStrategy (or Tactic)
Market Leader Expand; new uses/usersProtect: innovative tactics
Market Challenger Attack: aggressive promotionBackdoor: innovation optionsGuppy: go after smaller firms
Market follower Copy leader: match leader(do not challenge) Coping strategy: no confront. Market Nicher Geographic niche: quick resp.(specialize) Product niche: unique to cust.
Competitive Position Possible Strategies
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 18
Adapted from: Marketing
Planning Guide, Stevens et al,
publ. by the Haworth Press
PositioningStrategy (or Tactic)
High Luxury
Low Luxury
LowPrice
HighPrice
When few competitorsoccupy a positionit becomes attractive to position products in the same quadrant
• Mercedes• BMW
• Lexus• Legend• Infiniti
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 19
Market Segmentation
1. What are the identifying characteristics?
2. What is the size of the segment?
Attempt to develop a product that appeals to some part of the aggregate market
Two basic questions:
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 20
Psychographic (or lifestyle) Segmentation Useful in diagnosing markets, determining why consumers buy, and for aiming product design: Personality, life-style, self-concept (something lacking?), buying motives, attitudes. Examines:1. Interests (family, home, job, etc.)2. Opinions (social issues, politics, culture)3. Activities (work, hobbies, vacation, shoppingE.g. Timex's targeted the active lifestyle with Ironman and Triathlon
Ways of SegmentingMarket
Variables useful in deciding why buyers may want to buy.
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 21
Male Lifestyles
Scott, the frustrated factory worker, married early, had children, and now has financial troubles. Needs fantasy to make life more bearable, wants a sports car, doesn't think there is too much sex or violence on TV...................
Ben, the self-made business man, believes you get what you pay for, values his time, worries about excessive sex and violence on TV, and thinks the government should keep its nose out of private business
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 22
Candice, the chic suburbanite, supports women's lib., has many activities, and buys only whole-grain cereal for her children.............
Cathy, the contented mother, married early, big family, not enthusiastic about women's lib., is trusting, relaxed and buys cereals that her children demand.............
Eleanor, elegant socialite, spends little time preparing meals and on women's lib., spends lots of money, travels, and thinks face cream is better if it costs more.
Female Lifestyles
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 23
Benefit SegmentationFocuses,on benefits that are associated with the product & importance in purchase decisions: Economy, convenience, service, prestige.
Examples:Bank customers see convenience as the most important benefit (then service)
Toothpaste benefits: decay prevention, white bright teeth, good taste, fresh breath etc. Bright teeth most important to tobacco users and single persons.
Ways of Segmentingthe Market
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 24
Ways of Segmentingthe Market
Variables useful in guiding the product to a specific target
Geographic SegmentationRegion; urban, suburban, or rural; climate; state, county, or city. The most obvious way of identifying subparts of the aggregate market. Easy to apply but not always significant.
Snow tires, air conditioners, electric vehicles, types of bicycle etc.
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 25
Ways of Segmentingthe Market
Demographic Segmentn.Variables that distinguish states of existence: Age, sex, nationality, education, religion, race, occupation, income, social class, marital status, birthrate, family size, and family life cycle
under$5000
$5000$10,000
$10,000$25,000
over$25,000
2 +
1
0
# ofkids
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 26
Differential AdvantageProduct Differentiation
To obtain advantage over competition through observable differences in the product:
1. Obvious useful features (Polaroid's instant film processing)2. Obvious but no utility (Life Savers: 'the candy with the hole')3. Non-obvious, must be promoted (Estee Lauder: allure more than physical characteristics)
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 27
Differential AdvantageService Differentiation
Avis {1950s}: "We're number two - we try harder!"
Seek differences in the service offered or corporate culture that are of sufficient character and quality to give a preferred position in the consumer's acquisition of your products and/or services. Examples:
Motorola "6quality" and "Total Customer Satisfaction"
Avon:Selling personal products direct-to-home
•
•••Jelly: "With a name like Smucker, it has to be good"
TAM 302 Customer Requirement Driven Design & Competitor Analysis – PDS 28
• Understand the Market and it’s Potential Research Trends - General & specific market
forecasts
• Set Some Realistic Marketing Objectives Unit sales, revenue, profit objectives etc.
• Develop Marketing/Product Strategy
Identify potential Target Market, Competitive Tactic, Market Position, Segment and its size, & Differentiation.
Market Analysis Section of Project Report