Table Of Content

7/e a n a l y analysis for marketing planning s Concise, Flexible, and Relevant i s f Lauded as a hands-on resource, Analysis for Marketing Planning shows o students how to make decisions based on sound research. This unique r text focuses on the analysis needed for useful marketing decisions and is m structured around the core marketing document—the marketing plan. With a r the proven authorship of Donald R. Lehmann and Russell S. Winer, this k textbook will give students a valuable hands-on resource as they enter the e t professional arena. i n g Learn more by visiting the text’s Web site at p www.mhhe.com/lehmann7e l a n n i n g l e h m a n n s e v e n t h e d i t i o n | w i n e r ISBN 978-0-07-352984-4 MHID 0-07-352984-2 90000 E A N 9 780073 529844 www.mhhe.com donald r. lehmann | russell s. winer Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page i 210:MHIL063:mhLeh7:fm: Analysis for Marketing Planning Seventh Edition Donald R. Lehmann Columbia University Russell S. Winer New York University Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto Leh29842_fm_i-xiv.qxd 10/30/2007 10:27 PM Page ii pinnacle 210:MHIL063:mhLeh7:fm: ANALYSIS FOR MARKETING PLANNING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2008, 2005, 2002, 1997, 1994, 1991, 1988 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOC/DOC 0 9 8 7 ISBN 978-0-07-352984-4 MHID 0-07-352984-2 Editorial director:Brent Gordon Publisher:Paul Ducham Managing developmental editor:Laura Hurst Spell Editorial assistant:Sara Knox Hunter Associate marketing manager:Dean Karampelas Project manager:Jim Labeots Lead production supervisor:Michael R. McCormick Design coordinator:Joanne Mennemeier Media project manager:Suresh Babu, Hurix Systems Pvt. Ltd. Cover image:Courtesy of Getty Images Cover design:JoAnne Schopler Typeface:10/12 Times New Roman Compositor:Aptara Printer:R. R. Donnelley Library of Congress Cataloging-in-Publication Data Lehmann, Donald R. Analysis for marketing planning / Donald R. Lehmann, Russell S. Winer.—7th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-07-352984-4 (alk.paper) ISBN-10: 0-07-352984-2 (alk.paper) 1. Marketing—United States—Management. I. Winer, Russell S. II. Title. HF5415.13.L395 2008 658.8’02—dc22 2007040349 www.mhhe.com Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page iii 210:MHIL063:mhLeh7:fm: To our families, colleagues, and students Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page iv 210:MHIL063:mhLeh7:fm: Brief Contents Preface viii Chapter 4 Competitor Analysis 90 Acknowledgments x Chapter 5 About the Authors xi Customer Analysis 137 Chapter 1 Chapter 6 Marketing Planning 1 Market Potential and Sales Chapter 2 Forecasting 204 Defining the Competitive Set 29 Chapter 7 Chapter 3 Developing Marketing Strategy 253 Industry Analysis 62 Index 293 iv Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page v 210:MHIL063:mhLeh7:fm: Contents Preface viii Definitions 33 Overlapping Market Segments 38 Acknowledgments x The Impact of Metamediaries 39 About the Authors xi Product Strategy Implications 40 Illustrations 42 Methods for Determining Chapter 1 Competitors 44 Marketing Planning 1 Managerial Judgment 45 Overview 1 Customer-Based Measures 47 Summary 53 Definition and Objectives of Plans 1 Competitor Selection 54 Frequent Mistakes in the Planning Enterprise Competition 56 Process 5 Summary 59 What Makes a Good Planning System: References 59 Some Empirical Results 9 Is Planning Worthwhile? 9 The Planning Process 10 Chapter 3 Approaches to Planning 10 Industry Analysis 62 Steps in the Planning Process 10 Components of the Marketing Plan Overview 62 13 Aggregate Market Factors 64 The Executive Summary 13 Category Size 64 Situation Analysis 14 Market Growth 64 Marketing Objectives/Strategy 15 Product Life Cycle 65 Supporting Marketing Programs 15 Sales Cyclicity 66 The Rest of the Plan 15 Seasonality 67 Example 15 Profits 67 Two Case Studies 19 Category Factors 67 Specialty Coffee Retailing Threat of New Entrants 68 (ca. 2006/2007) 19 Bargaining Power of Buyers 71 MP3 Cell Phones (ca. 2006/2007) 21 Bargaining Power of Suppliers 72 Summary 24 Category Rivalry 73 References 24 Pressure from Substitutes 74 Capacity 75 Chapter 2 Environmental Analysis 75 Technological Factors 76 Defining the Competitive Set 29 Political Factors 78 Overview 29 Economic Factors 79 Levels of Market Competition 33 Regulatory Factors 80 v Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page vi 210:MHIL063:mhLeh7:fm: vi Contents Social Factors 80 Chapter 5 Illustrations 85 Customer Analysis 137 Retail Coffee 85 MP3 Phones 87 Overview 137 Summary 88 What We Need to Know About References 88 Customers 138 Who Buys and Uses the Product 138 What Customers Buy and How Chapter 4 They Use It 145 Competitor Analysis 90 Where Customers Buy 148 Overview 90 When Customers Buy 148 Sources of Information 96 How Customers Choose 149 Customers as Problem Solvers 155 Secondary Sources of Information 96 Why They Prefer a Product 155 Primary Sources of Information 102 The Special Case of New Products 159 Other Sources 104 Manifestations of Customer Value 161 Ethically Questionable Sources 106 Analyzing Product Features 108 How They Respond to Marketing Assessing Competitors’Current Programs 164 Objectives 109 Will They Buy It (Again)? 165 What Are They Worth? 166 Determination of Competitor Segmentation 170 Objectives 109 Assessing Competitors’Current Desirable Criteria for Segments 171 Strategies 112 Methods for Market Segmentation 172 Illustrations 190 Marketing Strategy 112 U.S. Cell Phone Customers 190 Comparing Value Chains 113 MP3 Players 191 Marketing Mix 114 Retail Coffee 192 How to Assess Competitors’ Summary 194 Strategies 115 References 195 Technology Strategy 118 APPENDIX 5A Differential Advantage Economic Value to the Analysis 120 Customer (EVC) 199 Ability to Conceive and APPENDIX 5B Design 122 Latent Class Methods 202 Ability to Produce 122 Ability to Market 122 Ability to Finance 122 Chapter 6 Ability to Manage 122 Market Potential and Sales What to Do with the Information 123 Forecasting 204 Assessing a Competitor’s Will 123 Predicting Future Strategies 125 Overview 204 Illustrations 129 Definitions 205 Retail Coffee 129 Market Potential 206 MP3 Cell Phones 132 Overview 206 Summary 135 What Potential Estimates Are References 135 Used For 206 Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page vii 210:MHIL063:mhLeh7:fm: Contents vii Information Sources 207 Chapter 7 New or Growing Product Developing Marketing Potential 209 Strategy 253 Mature Product Potential 211 Methods of Estimating Market and Overview 253 Sales Potential 211 Benefits of Strategy 254 Area Potential 214 Elements of Strategy 255 Sales Potential 215 Setting Objectives 256 Sales Forecasting 215 Selection of Strategic Overview 215 Alternatives 259 Level of Accuracy Needed 218 Increasing Sales/Market Share 260 Judgment-Based Methods 218 Increasing Profitability 262 Customer-Based Methods 223 Summary 263 Sales Extrapolation Methods 224 Positioning 264 Model-Based Methods 228 Choice of Customer Targets 264 What Methods Are Used? 230 Choice of Competitor Targets 265 Using Regression Models for Core Strategy 266 Forecasting 231 Brand Strategy 272 Developing Regression Brand Building 273 Models 232 Brand Leveraging 278 Recognizing Uncertainty 238 Measuring Brand Value 279 Nonlinear Relations 239 Customer Strategy 282 Share Forecasts 240 Marketing Strategy over the Forecasting Really New Products 241 Life Cycle 283 Illustrations 242 Introduction Strategies 283 Retail Coffee 242 Growth Strategies 284 PDA Sales 244 Maturity Strategies 286 Using Forecasts 245 Strategies for the Decline Stage 287 Combining Forecasts 245 Summary 287 Gaining Agreement 246 Illustrations 288 Why Not Just Go to the Web? 247 Retail Coffee: Peet’s 288 Summary 247 MP3 Cell Phones: Sony Ericsson References 247 Walkman 288 APPENDIX 6A Summary 288 Time Series Regression with References 289 Seasonal Factors 249 Index 293 Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page viii 210:MHIL063:mhLeh7:fm: Preface RATIONALE Many marketing books deal with marketing on the strategy level, addressing issues such as what business to be in. Oth- ers focus on operating-level product/brand management decisions involving the marketing mix or its individual elements (e.g., price, advertising/communications) whether the focus is strategic or tactical. In either case, sound decisions generally stem from sound analysis. This book focuses on the analysis needed for marketing decisions. It is structured around the basic planning document, the marketing plan. This book evolved from a course given at the Columbia Business School called Marketing Planning and Strategy. In the mid-1970s, the marketing faculty at Columbia realized that traditional marketing management courses in business school curricula were fine for preparing MBA students for senior-level marketing positions, but did not equip them with the tools necessary for first jobs with titles such as “assistant brand manager” or “product manager.” It was felt that students needed a “hands-on” course that would prepare them for the data collection and analysis tasks that often fall to junior-level managers. Interestingly, having a basic tem- plate for analysis proved beneficial for strategy-based courses as well. The exercise of actually developing a marketing plan is highly integrative as it brings together concepts learned from marketing research, marketing strategy, finance, operations, and policy courses. Despite the advent of the Internet and the resulting development of new job titles, terminology, and technology, the need to develop sound analysis and planning is as important as ever. This book does not attempt to cover all aspects of the marketing plan. We focus on the analysis of information per- taining to a product’s environment, customers, and competitors. Chapter 1 contains an overview of an operating marketing plan. As such, the book can be used as a com- panion text to books on strategic marketing management, which tend to focus more on what to do after the type of analysis treated in this book has been completed, as part of a product/brand management course, or as a general ref- erence for practitioners. Over the previous six editions of the book, we have been surprised and gratified at the wide variety of courses and contexts for which the book has been adopted. viii Leh29842_fm_i-xiv.qxd 10/27/07 3:55 PM Page ix 210:MHIL063:mhLeh7:fm: Preface ix OUTLINE OF THE BOOK The book has seven chapters. The first six provide specific analytical methods and data sources that can be useful for each of the analyses discussed in the chapters. Perhaps as important, they also provide some useful formats for summarizing the information. Chapter 7 then relates the concepts to the development of marketing strategy. The chapters are: 1. Marketing Planning. In this chapter, we present the rationale for planning, pitfalls that should be avoided, and an outline of a complete marketing plan. 2. Defining the Competitive Set. One of the most challenging decisions faced by marketing managers is that of defining the competition since the set of competitors can usually be con- structed as narrowly or as broadly as desired. This chapter discusses methods for defining different levels of competition. 3. Industry Analysis. Fundamental criteria for evaluating a product’s position in the market are aggregate factors such as market growth rate, industry factors such as barriers to entry, and environmental factors such as regulation. 4. Competitor Analysis. Monitoring strategies of key competitors and anticipating their likely moves are key to the development of successful marketing strategy. This chapter covers how to analyze competition in terms of competitors’ objectives, strategies, and capabilities, and most important, how to predict future actions. 5. Customer Analysis. At the core of modern thinking about marketing is a customer orientation. In this chapter, we discuss the key information required to monitor customer behavior. 6. Market Potential and Sales Forecasting.In this chapter, we describe methods for estimating the potential size of a market and predicting future levels of sales and/or market share. 7. Developing Marketing Strategy. Rather than leaving the reader “hanging” after the discussion of the situation analysis, we have included a chapter outlining how the concepts developed earlier in the book can be used to develop a marketing strategy. In this seventh edition, one of the major changes is the introduction of two new running examples, Retail Coffee and MP3 Cell Phones. The pair of running examples has always been a feature that readers liked best, so we have updated it to include new material from current sources. In addition, we now have an extensive discussion of customer lifetime value in the chapter on customer analysis (Chapter 5).