Customers, Markets,

Competitors in a Digital World

Chapter 4

Customer/
Market
Analysis

Competitive
Analysis

Pricing &
Positioning

Internet Patterns of Entrepreneurship Management

Market 5th Edition, Chapter 4
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Presentation Outline

Chapter 4 • Customer/Market Analysis

Customer/ – Niche or target markets
Market
Analysis
– One to One Marketing
– Define the Market Segmentation
Competitive
Analysis
– Market Research
• Evaluate the Competition-Sample Evaluation
Pricing & • Prepare the Pricing Plan
Positioning
• Position the Product or Service
Internet
Market
• Using The Internet for Market Research
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Niche, Verticals and Target
Markets
Chapter 4
Ø A niche market is a small segment of a
Customer/
Market large market ignored by other companies
Analysis
Ø A vertical market is a specific sector or
Competitive class of customers that may require
Analysis
different products and/or be acquired
through different marketing channels
Pricing &
Positioning Ø Target marketing is a strategy to focus on
segments of a market and prepare a plan
Internet
Market for each market segment or vertical.
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Rogers’ Bell-Curve - Customer Adoption Patterns

Chapter 4

Customer/
Market
Analysis

Competitive
Analysis

Pricing &
Positioning
When introducing a new product or service, you should target
Internet customers who are more likely to try something new – the
Market innovators and early adopters. They are usually not price-sensitive.
Research These customers can usually be found and attracted using social
media methods.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Prepare the Marketing Analysis
and Plan (Page 84)
Chapter 4 Identifying Customers--Consider the 4 factors
Customer/ • Market Identification--Current market and service
Market needs determined
Analysis
• Current and Best Customers--to allocate resources
Competitive to segment the market
Analysis
• Potential Customers--target by geographical or
Pricing &
industry wide, or ease of reaching via social media
Positioning platforms
• Outside factors --identify changing trends
Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 One to One marketing (Page 85)

Chapter 4 Learn the profile or details about customers to

identify the most valuable ones.
Customer/
Market • Identify customers or get them to identify
Analysis themselves
Competitive • Link customers identities to their transactions
Analysis
• Calculate individual customer lifetime value
Pricing & • Strengthen a customer satisfaction program
Positioning
• Social media methods, such as on-line advertising,
“click through” links, search engine optimization
Internet
Market and networking on social platforms are excellent
Research for finding individuals at low cost.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Internet Market Research
Accessing potential customers using the internet is a low-cost way of
Chapter 4
researching customer needs and behaviors. Here are a few examples:
Customer/ Ø Research sites such as “Ask Your Target Market” have a large network
Market of motivated potential customers that they can question
Analysis Ø Using a “smoke-screen” web-site that probes customers found on chat
rooms on social media platform
Competitive Ø Explore search engine key-words on Google to drive potential customers
Analysis to your informative web-site
Ø Posting Blogs about your company and its products in on-line discussion
groups
Pricing & Ø Creating informative video content to post on Youtube or Vimeo
Positioning
Ø Launching an MVP for testing with a small group of early adopters
Ø Using a crowd-sourcing site to “pre-sell” products before complete
Internet development (See Chapter 5)
Market Ø Creating informative content to stimulate relevant “influencers” to post
Research comments on their web-sites and in blogs.

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Define the Market Segmentation
(Page 87)
Chapter 4
There are Several Ways to Segment a Market
Customer/ Ø Demographic Segmentations-divide the market into
Market
Analysis groups,based on age,income level and gender
Ø Geographic Segmentation- divide people or
Competitive
Analysis businesses into regional and by location
Ø Psychographic Segmentation-divides into cultural
Pricing & groups,value or social categories
Positioning
Ø Tech-savvy segmentation – heavy users of devices
Internet
and the internet
Market
Research
Ø Ethnic Segmentation- divide by ethnic group

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Questions for Effective
Segmentation (Page 88)
Chapter 4 Ø Do potential customer groups have different
Customer/
needs?
Market
Analysis Ø Can the customers that fit into a given
segment be identified?
Competitive
Analysis
Ø Are customers both willing and able to pay?
Pricing & Ø Is the segment large enough to be profitable?
Positioning
Ø Can the segment be reached in a cost-
Internet effective manner? For example, directly via
Market
Research the internet?
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Conduct A Competitive Analysis
(Page 89)
Chapter 4
• It is particularly important to identify which
Customer/ businesses will provide the most significant
Market
Analysis competition and predict what they will likely
do.
Competitive
Analysis • Analyze the situation by asking the questions
provided below regarding six key areas of
Pricing & competition.
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Competitive Analysis: Porter’s 5
Forces
Link: https://www.youtube.com/watch?v=33XmkfbzwO8
Chapter 4 Potential Threat of
Entrants New
Entrants
Customer/ •Economics of Scale •Access to Distribution
Market •Proprietary Product
Differences
•Government Policies
•Expected Retaliation
Analysis •Brand Identity

Competitive Bargaining
Power
Industry Bargaining Power
of Buyers
Analysis Suppliers of Suppliers Competitors Buyers
Rivalry Among
Existing Firms •Buyer Concentration
•Switching Costs of
vs. Firm
Suppliers
Pricing & •Importance of Volume to •Industry •Buyer Volume
Positioning Suppliers Growth
•Product
•Exit Barriers •Buyer Switching Costs
•Substitute Products
•Cost Relative to Total •Diversity of
Differences Competitors •Product Differences
Purchases
•Brand Identity •Brand Identity
•Impact on Cost or
Internet Differentiation
•Impact on Quality/Performance

Market Internet •Buyer Profile

Research Companies
Business to Consumers
Business to Business
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Evaluating the Competition
Sample Evaluation (page 91)
Chapter 4 Factors Attractiveness
High Low
Customer/
Competition among Competition is The industry is
Market companies minimal but will declining and is
Analysis become intense in mature
1year
Competitive The power of Volume is high and Customer has few
Analysis customers willing to negotiate switching costs
The power power of Many substitutes and Limited supply;
suppliers sources are available products differentiated
Pricing & Internet companies No competition Many companies are
defined on the internet entering this market
Positioning
Potential threats Complex barriers and Few simple entry
costs are high to enter barriers to enter the
Internet market business
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Measuring the Venture’s
Strengths and Weaknesses
Factor Attractiveness
Chapter 4
High Low
Customer/ Management team Proven People w ith right
Market skills not available
Analysis Financing You have comfortable You have a narrow
cushion or can raise time horizon to make
Competitive capital if needed money
Analysis Product development Complete product line One product of
limited life
Sales force Strong contacts; Limited contacts;
Pricing & specialist skills generalist skills
Positioning Marketing Deep and tightly- Untargeted
focused
Internet Operations Strategic alliances Learning in a vacuum
Market help improve
Research execution

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Product and Service Questions
(Page 90)
Chapter 4
• How is the competitive product or service
Customer/ defined?
Market
Analysis • How is it similar or different?
Competitive • Does the competition cater to a mass, niche or
Analysis vertically targeted market?
Pricing &
• What features of the product are superior?
Positioning • What strengths or weaknesses of the
competition can be exploited?
Internet
Market • Has the competitor developed a strong brand
Research
and image?
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Price Questions (Page 90)

Chapter 4

Customer/
• What is the competitor’s pricing strategy?
Market
Analysis • Is the competitor’s price higher or lower?
Competitive
• What is the competitor’s gross margin for
Analysis similar products?
• Does the competitor offer terms, discounts,
Pricing &
Positioning or promotions

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Industry Competitors (Page 90)

Chapter 4

Customer/
• Define the competition in terms of new,
Market Internet, or potential threats of existing
Analysis companies.
Competitive
• What are the strengths and weaknesses of
Analysis each?
• How will internet-centric companies affect the
Pricing & business?
Positioning
• How can the suppliers or buyers affect the
Internet
competition?
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Management Team (Page 90)

Chapter 4
• How strong is the competitor’s management
Customer/
Market
team?
Analysis
• What is their background or experience?
Competitive
Analysis • How do they recruit new key employees?
• What skills have they been recruiting?
Pricing &
Positioning • What consultants have they been using?

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Financial Questions (Page 90)

Chapter 4
• Is the competitor profitable?
Customer/
Market • What volume are sales and market shares?
Analysis
• Do they spend money for R&D, Internet, and
Competitive
Analysis web development?
• Are they properly capitalized? How strong is
Pricing &
Positioning
their cash flow?
• How are they funded? Do they have access to
Internet
Market additional capital if needed?
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Preparing the Pricing Plan (Page 92)
Pricing Methods
Chapter 4
Value: Price should not be based simply on cost, plus a
Customer/ modest profit. Instead, price should be based on the value
Market
of the product or service.
Analysis
Rationale: Why prices differ from those of the
Competitive competitors.For instance, does the new business perform a
Analysis
function faster or more efficiently?

Pricing &
Differential: Can independent market sectors or verticals be
Positioning priced differently to maximize value?

Tiered: Customers are provided a basic version of the product

Internet at low cost, or even for free. After gaining confidence they
Market purchase an upgrade (or upsell) for more features and
Research benefits. Referred to as “Freemium” pricing.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Calculation of Breakeven Point
(Page 92) Hotel Example
Chapter 4

Customer/
Market
Analysis

Competitive
Analysis

Pricing &
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 How to Position the Product or
Service (Pg 93)
Chapter 4 • One way to charge a high price is when competition
and substitution products are minimal
Customer/
Market • Another is to “match competition” by pricing
Analysis
slightly under the competitor’s rates to expand one’s
Competitive own market share (for example, Samsung or Apple
Analysis Smartphones).
• A third is to substantially under-price the market, so
Pricing &
Positioning
as to exclude competitors altogether
• Early adopters usually are not price-sensitive, so
Internet beware entering the market with a unique product
Market and under-price it – it is always harder to raise
Research
prices.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Market Research Using the Internet

Chapter 4 •The internet can be used to undertake initial

Customer/ market research cost effectively.
Market
Analysis

Competitive
• Using “web 2.0” tools and social networks, a
Analysis campaign can be carried out in just a few days
or even hours!
Pricing &
Positioning
• Here are just two examples of how the
Internet can be used for market research…..
Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Example 1: “Smoke-Screen Test”
(Pg 79)
Problem: how can “early-adopters” be attracted to a web-site
Chapter 4
offering new methods for alleviating asthma, what is the
Customer/ price they will pay, and how likely they will buy?
Market
Analysis
Cost effectively:
• Gain website traffic by a social networking presence
Competitive
Analysis
• Gather customer information and preferences

Resource Requirements:
Pricing &
Positioning • Daily monitoring of social networking (15 mins/day)
• $500 – $1,000 funding for Google AdWords campaign
Internet
Market to draw direct traffic to the site.
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Task 1: Build Web Presence
via Social Networking
• Establish Twitter account: “@breathesimple”
Chapter 4

Customer/ • Continually track ‘tweet’ keywords:

Market – Asthma attack
Analysis – Nebulizer
– Asthma emergency room
Competitive
Analysis • Sample tweets:

Pricing &
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Task 2: Build Dummy Website
to Draw Traffic

Chapter 4 • www.breathesimple.com Home Page:

Customer/
Market
Analysis

Competitive
Analysis

Pricing &
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Task 3: Track Website Traffic
Using Google Analytics
Chapter 4

Customer/
Market
Analysis

Competitive
Analysis

Pricing &
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Task 4: Create Short Survey to
Gather Customer Info

Chapter 4

Customer/
Market
Analysis

Competitive
Analysis Goal:
Gather as much information as possible without
being asking too much of the customer.

Pricing &
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Task 5: Track Survey Results
Using Automatic Analysis Tool
Chapter 4

Customer/
Market
Analysis

Competitive
Analysis

Pricing &
Positioning

Internet
Market
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Results from Smoke-Screen Market Research

Chapter 4 The acquired data was sufficiently detailed for

use in the business plan:
Customer/
Market •Cost of Market Research - $1200
Analysis
•Duration of Market Research - 2 weeks
Competitive •Number of visitors drawn to site – 2100
Analysis
•Number that completed questionnaire and provided

Pricing & contact information for purchase – 143

Positioning •Cost per customer acquisition - $8.40
•Conversion rate buyer/visitor – 6.8%
Internet
Market •Acceptable price point for product - $300.
Research

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Example 2: Primary Market Research

Chapter 4 Problem: How will current customers view improvements to

an existing product, what will they pay for these, and how
Customer/
Market
much time will they invest in learning the new features?
Analysis Cost effectively:
Competitive
• Target users of existing products
Analysis • Gather customer feed-back

Pricing &
Resource Requirements:
Positioning
• Creating questionnaire (2 hours)
Internet • $50 per respondent up to 150 replies with analysis
Market
Research
• 80 responses in 3 days, 150 within 2 weeks.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Example 2: Primary Market Research

Use the service of, for example “Ask Your Target Market”
Chapter 4 (www.aytm.com)

Customer/ • Over 2.5 million registered respondents.

Market
Analysis
• Questionnaire screens randomly selected respondents to
identify “targeted audience” e.g. Q 1. “I have just bought
Competitive a pair of new shoes” or “I am planning a vacation in
Analysis
Thailand.”
• Only those meeting the required audience get to the
Pricing &
Positioning main questionnaire and get paid for their full response.
• Survey results collected over a few days and analyzed
Internet using aytm tools.
Market
Research • Total costs are around 30% of traditional market research
interview methods and takes much less time.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Example 2: Problem Definition

• Halare Inc. developed an improvement to the existing treatments of

Chapter 4 Sleep Disordered Breathing.

Customer/ • The current method to alleviate the symptoms is for the sufferer
Market to wear a “Constant Positive Airway Pressure” mask (CPAP) in bed.
Analysis
• The company developed a short questionnaire to target existing
Competitive users of CPAP machines in order to learn:
Analysis
a) current usage patterns
Pricing & b) reasons for dissatisfaction of existing products
Positioning c) using a video example of the Halare product,
how they viewed the potential improvements
d) how much time they would devote to learning
Internet to use the additional features
Market e) what percentage of respondents would purchase the new device and
Research at what price.

Copyright 2015 Jack M. Kaplan & Anthony C. Warren

 Example 2: Results

The next slide shows a typical chart derived from the questionnaire*.
Chapter 4
PQ is the pre-screening question, and eliminates any respondent that is
Customer/ not part of the target market.
Market
Analysis Q1 examines the current usage patterns of CPAP machines.

Competitive It is shown that < 50% of the users do NOT use their CPAP’s every
Analysis night which can lead to serious health problems.

Pricing &
The Questionnaire continued to explore the reasons for poor compliance
Positioning and offer Halare’s alternative solution.

The respondent number was capped at 150 which provided a statistically

Internet valid population while limiting total cost of the primary market research
Market
to $7500.00.
Research
* Another more complete example can be found in the book, chapter 4.
Copyright 2015 Jack M. Kaplan & Anthony C. Warren
 Example 2: Typical Result Chart

Chapter 4

Customer/
Market
Analysis

Competitive Copyright 2015 Jack M. Kaplan & Anthony C. Warren

Analysis and AYTM Inc.

Pricing &
Positioning

Internet
Market
Research
Copyright 2012 Jack M. Kaplan & Anthony C. Warren