C3 - Marketing - 5Cs - Fall 2023 - Notre Dame.pdf

Marketing class slide presentation

1. Analyzing the Marketplace
for Opportunities (The 5Cs)
Mitchell C. Olsen, Ph.D.
Foundations of Marketing
Class 3: T, August 29, 2023

2. The 5Cs
2

3. Company
Customers
Competitors
Collaborators
Context
The 5Cs: Company
3
Company Mission
Company Objectives
Business Portfolio
Resources, including…
Brands
Intellectual Property (e.g., patents)
Human Capital
Financial Capital
Organizational Structure & Culture
Property, Plant, & Equipment
5 Cs
Due Diligence
1

4. Company
Customers
Competitors
Collaborators
Context
The 5Cs: Customers
4
Current customer base
Value
(e.g., customer equity, RFM analysis, ABC accounting)
Unmet Needs / Pain Points
Expressed needs  Incremental Innovation
Unexpressed/latent needs Radical Innovation
5 Cs
Due Diligence
1

5. Company
Customers
Competitors
Collaborators
Context
The Competition
5
Who are we competing against?
How intense is the competition? Is the category
growing? How dynamic/volatile is the
competitive environment?
Who’s winning? Why?
Who’s losing? Why?
What are their strengths? Weaknesses?
How are we different?
How compelling is our difference?
5 Cs
Due Diligence
1

6. The Competition: Who Is It?
6
From the firm’s perspective…
A strategic groupsdefinition argues that competitors can be defined
by howthey compete to serve the customer. For example,
competitors can be grouped according to whether they…
Pursue similar competitive strategies
(e.g., use the same distribution channels,
compete on low prices, emphasize heavy media advertising, etc.)
Have similar firm characteristics(e.g., size, geography, culture, etc.)
Have similar types of assets(e.g., quality image, strong innovation culture,
capable sales force, etc.)

7. The Competition: Who Is It?
7
From the firm’s perspective…
A strategic groupsdefinition argues that competitors can be defined
by howthey compete to serve the customer.
Industry: Pet Food Characteristics CompetitiveSet
Group #1:
Large,diversified, branded
consumer companies
Large portfolio of products
Heavy advertisers
Similarly structured Sales
departments
Mars
Nestle Purina
Big HeartPet Brands
Group #2:
Small,highly focused, branded
natural food specialty firms
Narrowlydefined target
market
Distribute through non- grocery
channels (e.g., vets, specialty
retailers, online)
WellPet
Merrick Pet Care
Nature’s Variety
Group #3:
Private Label/ Contract
Manufacturers
Manufactureprivate label pet
foods for various retail clients
Produce food under contract
for non- private label brands
Diamond Pet Foods
Sunshine Mills
Simmons Pet Food

8. The Competition: Who Is It?
8
From the customer’s perspective…
A customer choice definition is based on how the customer defines
competing solutions.
The competitive set is produced by considering situational, contextual, and
usage factors.
The resulting array of competitors may include firms with very different
offerings.
Strategic Groups
Industry: Ice Cream Brands
Group #1: Standalone National Ice Cream Shops
Dairy Queen, Cold Stone, Baskin-Robbins
Group #2: Standalone Local Ice Cream Shops
Kilwin’s, Graeter’s, Twisted Cow
Group #3: Distributed National Ice Cream Brands
Breyers, Talenti, Ben & Jerrys, Blue Bunny
Customer Choice
Desired Solution: Fill mindless time
during the daily commute home.

9. The Competition: Who Is It?
9
From the customer’s perspective…
Nielsen’s Brand Association Mapping (BAM)

10. Assessing the Competitive/Category Environment:
The Big Three Measures
Dess& Beard (1984) identify three competitive environment variables
that impact the strategy-performance relationship in most product
categories:

Competitive Intensity: Is the category dominated (in terms of
market share) by relatively few players?

Munificence: Is the category growing?
Dynamism: How volatile is the category environment?
10
Dess, Gregory G. and Donald W. Beard (1984), “Dimensions of Organizational Task Environments,”
Administrative Science Quarterly, 29 (1), 52 -73.

11. The Competition: How Intense Is It?
How should competitive intensitybe quantified?
•Number of competitors
Pro:
Con:
•Concentration (i.e., competitive intensity)
Pro:
Con:
Measure via the category’s Herfindahl-Hirschman Index (HHI) score:
•Category m’s HHI score is the sum of the squares for each brand i’s share of category
revenue (inverted so that scores closer to 1 reflect greater competitive intensity)
11
Dess, Gregory G. and Donald W. Beard (1984), “Dimensions of Organizational Task Environments,”
Administrative Science Quarterly, 29 (1), 52- 73.
HHI
mt=1−
�
i=1
n
CategoryDollarShare
it
2

12. Competitive Intensity: Two Scenarios
The competitive intensity of a category can be measured via the category’s Herfindahl-
Hirschman Index (HHI) score (0-1 scale):
Category m’s HHI score is the sum of the squares for each brand i’s share of category
revenue (inverted so that scores closer to 1 reflect greater competitive intensity)
12
HHI
mt=1−�
i=1
n
CategoryDollarShare
it
2
Category A Category B
25% 25%
25% 25%
HHI
At= 1 –(.25
2
+ .25
2
+ .25
2
+ .25
2
)
HHI
At= 1 –(.0625 + .0625 + .0625 + .0625)
HHI
At= 1 –(.25) = .75
78%
12%
7%
3%
HHI
Bt= 1 –(.78
2
+ .12
2
+ .07
2
+ .03
2
)
HHI
Bt= 1 –(.6084 + .0144 + .0049 + .0009)
HHI
Bt= 1 –(.63) = .37

13. Competitive Intensity:
Comparing the Ends of the HHI Spectrum
The competitive intensity of a category can be measured via the category’s Herfindahl-
Hirschman Index (HHI) score (0-1 scale):
Category m’s HHI score is the sum of the squares for each brand i’s share of category
revenue (inverted so that scores closer to 1 reflect greater competitive intensity)
13
HHI
monopoly= 1 -1= 0 HHI
∞ competitors = 1 -0= 1
0 1
HHI
mt=1−�
i=1
n
CategoryDollarShare
it
2
A market with ONE player, and
thus, 100% market share (1
2
= 1)
A market with an infinite number of competitors, all with equal
market shares. Thus, each player’s individual market share squaredis
effectively zero –as is the sum of
all players’ squared market shares.

14. How Munificentis the Competitive Environment?
Category munificenceis generally defined as the abundance of
resources and the environment’s resulting capacity to support growth
(Keats and Hitt1988) and provide a better environment for new
product introductions to succeed (Henardand Szymanski 2001).
14

15. How Dynamicis the Competitive Environment?
Category dynamismreflects the level of instability, or volatility, in a
category (e.g., Davis, Eisenhardt, and Bingham 2009) and has been
shown to influence the effectiveness of strategic actions (e.g., Larraneta
et al. 2014). Highly dynamic environments challenge the existing rules
of competition (D’Aveni1994; Wiggins and Ruefli2005).
15
Category Sales
Time
Category A: Stable
Category B: Volatile

16. Common Types of Collaborators
16
5 Cs
Due Diligence
1
Manufacturing Supplierscollaborate by providing the
company with components needed for the final product.
Research & Developmentcollaborators work with the
company on the development of new products and
services.
Service Providerscollaborate with the company to deliver
the service aspect of the company’s offering.
AdvertisingAgenciesassist the company with promoting
its offerings to target customers, managing public relations, developing communication and branding strategies, and conducting marketing research.
Sales Force / Brokeragescollaborate with the company to
promote and/or deliver its offerings to target customers.
Marketing Researchentities enable the company to better
understand the company’s customers, collaborators,
competitors, and the overall context in which the company operates.
Company
Customers
Competitors
Collaborators
Context

17. Company
Customers
Competitors
Collaborators
Context
Context via a PEST Analysis
17
5 Cs
Due Diligence
1
•Core Values
•Subcultures
•Trends
•Competing tech.
•Customer use
•Obsolescence rates
•Income Level
•Interest Rates
•Savings Rates
•Tariffs
•Taxes
•Laws
Political-
Legal
Economic
Socio-
Cultural
Technolog
-ical

18. A Major Consumer Trend in 2021
People are STRESSED OUT…
June 2021: Nearly 1/3 of Americans reported experiencing symptoms of
anxiety or depression
(Centers for Disease Control and Prevention)
•2019: Only 11% reported such symptoms (National Center for Health
Statistics)
Increases were recorded across every
demographic category
…but they are open to new solutions
50% of consumers 18-24 reported they have changed their approach to
mental health
28% of people ages 57-75 (Ernst & Young survey of 1,001 U.S. adults, 2021)
18

19. Product Solutions for Stressed-out Consumers
19

20. Product Solutions for Stressed-out Consumers
20

21. Product Solutions for Stressed Out Consumers
21

22. 22

23. Check-out Free Technology
+ Retail Collaborations
23

24. Political-Legal Headwinds?
States & cities that have passed bills requiring all retailers to accept cash:
States:
•Colorado
•Massachusetts
•New Jersey
•Rhode Island
Major cities:
•Philadelphia
•New York City
•San Francisco
•Washington, D.C.
24

25. 25

26. 26

27. Marketing in the meh-taverse?
27

28. What We Covered
28
5Cs
•Company
•Customers
•Competitors
•Collaborators
•Context