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a specific quantity of a product or service or capturing market share。
MBAs are frequently set the challenging task of measuring the size of
the market。 Now in principle this is not too difficult。 Desk research （see
in ‘Market research’ later in this chapter） will yield a sizeable harvest of
statistics of varying degrees of reliability。 You will be able to discover that
the consumption； say； of bread in Europe is ￡10 billion a year。 But first you
need a definition of bread。 The industry…wide definition of Bakery includes
Marketing 83
sliced and un…sliced bread； rolls； bakery snacks and speciality breads。 It
covers plant…baked products； those that are baked by in…store bakers； and
products sold through cra。。 bakers。
Assessing the relevant market then involves refining global statistics
down to provide the real scope of your market。 If your business operates
only in the UK the market is worth over ￡2。7 billion； equivalent to 12
million loaves a day； one of the largest sectors in Food。 If you are operating
only in the cra。。 bakery segment then the relevant market shrinks to ￡13。5
million； this contracts still further to ￡9。7 million if you are； say； operating
only within the radius of the M25 ring road。
The importance of market share
The relevant market will be shared by various peting businesses in
different proportions。 Typically there will be a market leader； a couple of
market followers and a host of businesses trailing in their wake。 The slice
that each petitor has of a market is its market share。 You will find that
marketing people are fixated on market share； perhaps even more so than
on absolute sales。 That may appear li。。le more than a rational desire to beat
the ‘enemy’ and appear higher in rankings； but it has a much more deepseated
and profound logic。
Back in the 1960s a firm of US management consultants observed a consistent
relationship between the cost of producing an item （or delivering
a service） and the total quantity produced over the life of the product
concerned。 They noticed that total unit costs （labour and materials） fell by
between 20 and 30 per cent for every doubling of the cumulative quantity
produced。 （See Chapter 12 for more on the experience curve effect。）
Tesco
40％
Asda
21％
Morrison/Safeway
15％
Independents
3％
Sainsbury's
21％
Figure 3。1 Market share UK supermarkets June 2008
84 The Thirty…Day MBA
So any pany capturing a sizeable market share will have an implied
cost advantage over any petitor with a smaller market share。 That cost
advantage can then be used to make more profit； lower prices and pete
for an even greater share of the market； or invest in making the product
be。。er and so stealing a march on petitors。
petitive position
It follows that if market share and relative size are important marketing
goals； you need to assess your products’ and services’ positions relative to
the petition in your relevant market。 The techniques most used to carry
out this analysis are SWOT and perceptual mapping。
Strengths； weaknesses； threats and opportunities （SWOT）
This is a general…purpose tool developed in the late 1960s at Harvard by
Learned； Christensen； Andrews and Guth； and published in their seminal
book； Business Policy； Text and Cases （Richard D Irwin； 1969）。 The SWOT
framework consists of a cross； with space in each quadrant to summarize
your observations； as in Figure 3。2。
Figure 3。2 Example SWOT chart for a hypothetical Cobra Beer petitor
Strengths Weaknesses
1。 Beginning to get brand
recognition
2。 Established strongly in Indian
restaurants
1。 Don’t have own production
2。 Need more equity finance to be
able to advertise more strongly
Opportunities Threats
1。 We could capitalize more on
our relationships in Indian
restaurants
2。 We are only in the UK – so
have the world to go for
1。 We are vulnerable to a big player
targeting our niche
2。 Our sector looks like being the
target of major tax rises which
could reduce overall demand
In this example the SWOT analysis is restricted to a handful of areas； though
in practice the list might run to a dozen or more areas within each of the
four quadrants。 The purpose of the SWOT analysis is to suggest possible
ways to improve the petitive position and hence market share while
minimizing the dangers of perceived threats。 A strategy that this SWOT
would suggest as being worth pursuing could be to launch a low…alcohol
product （and sidestep the tax threat） that would appeal to all restaurants；
Marketing 85
rather than just Indian （widen the market）。 The pany could also start
selling in India using the international cachet of being a UK brand。 That
would open up the market still further and limit the damage that larger UK
petitors could inflict。
SWOT is also used as a tool in strategic analysis and indeed it was so
used by General Electric in the 1980s。 While it is a useful way of pulling
together a large amount of information in a way that is easy for managers
to assimilate； it can be most effective when used in individual market
segments； as a strength in one segment could be a weakness in another。 For
example； giving a product features that would enhance its appeal； say； to
the retirees market may reduce its appeal to other market segments。
Perceptual mapping
Perceptual or positioning maps are much used by marketing executives to
position products and services relative to petitors on two dimensions。
In Figure 3。3 the positions of panies peting in a particular industry
are pared on price and quality； on a spectrum from low to high。
Similar maps can be produced for any bination of variables that are
of importance to customers – availability； product range； a。。er…sales support；
market image and so on。 The technique is used in a variety of ways；
including highlighting possible market gaps when one quadrant is devoid
of players； suggesting areas to be built on or extended； or where a USP （see
below） is required to create a petitive edge。
High quality
Skoda Audi
Low quality
Low price High price
Proton Triumph Stag
Figure 3。3 Perceptual mapping
86 The Thirty…Day MBA
UNDERSTANDING CUSTOMERS
Without customers no business can get off the ground； let alone survive。
Knowing something about your customers； what they need； how much
they can ‘consume’； who they buy from now； all seems such elementary
information that it is hard to believe so many people could start without
those insights： and yet they do。
There is an old business maxim that says the customer is always right。
But that does not mean they are necessarily right for you。 So as well as
knowing who to sell to； you also need to know the sorts of people who are
not right for you and accept that trying to interest them will be a waste of
scarce resources on your part。
Recognizing needs
The founder of a successful cosmetics firm； when asked what he did；
replied： ‘In the factories we make perfume； in the shops we sell dreams。’
Those of us in business usually start by defining our business in physical
terms。 Customers； on the other hand； see businesses having as their
primary value the ability to satisfy their needs。 Even firms that adopt
customer satisfaction； or even delight； as their stated maxim o。。en find it
a more plex goal than it at first appears。 Take Blooming Marvellous
（see below）。 It made clothes for the mother…to…be； sure enough： but the
primary customer need it was aiming to satisfy was neither to preserve
their modesty nor to keep them warm。 The need it was aiming for was
much higher： it was ensuring that its customers would feel fashionably
dressed； which is about the way people interact with each other and how
they feel about themselves。 Just splashing； say； a Tog rating showing the
thermal properties of the fabric； as you would； say； a duvet； would cut no
ice with the Blooming Marvellous potential market。
Until you have clearly defined the needs of your market（s） you cannot
begin to assemble a product or service to satisfy them。 Fortunately； help
is at hand。 An American psychologist； Abraham Maslow； who taught at
Brandeis University； Boston and whose International Business School
now ranks highly in the Economist’s survey of top business schools （see
the Appendix for more on business school rankings）； demonstrated in
his research that ‘all customers are goal seekers who gratify their needs
by purchase and consumption’。 He then went a bit further and classified
consumer needs into a five…stage pyramid he called the hierarchy of needs。
Self…actualization
This is the summit of Maslow’s hierarchy； in which people are looking for
truth； wisdom； justice and purpose。 It’s a need that is never fully satisfied
Marketing 87
and according to Maslow only a very small percentage of people ever reach
the point where they are prepared to pay much money to satisfy such
needs。 It is le。。 to the likes of Bill Gates and Sir Tom Hunter to give away billions
to form foundations to dispose of their wealth on worthy causes。 The
rest of us scrabble around further down the hierarchy。
Esteem
Here people are concerned with such ma。。ers as self…respect； achievement；
a。。ention； recognition and reputation。 The benefits that customers are
looking for include the feeling that others will think be。。er of them if they
have a particular product。 Much of brand marketing is aimed at making
consumers believe that by conspicuously wearing the maker’s label or
logo so that others can see it； it will earn them ‘respect’。 Understanding
how this part of Maslow’s hierarchy works was vital to the founders of Responsibletravel。
（responsibletravel）。 Founded six years ago
with backing from the late Anita Roddick （Body Shop） in Justin Francis’s
front room in Brighton； with his partner Harold Goodwin； it set out to be
the world’s first pany to offer environmentally responsible travel and
holidays。 It was one of the first panies to offer carbon offset schemes
for travellers and it boasts that it turns away more tour panies trying
to list on its site than it accepts。 It appeals to consumers who want to be
recognized in their munities as being socially responsible。
Social needs
The need for friends； belonging to associations； clubs or other groups and
the need to give and get love are all social needs。 A。。er ‘lower’ needs have
been met； these needs； which relate to interacting with other people； e
to the fore。 Hotel Chocolat （hotelchocolat。uk）； founded by Angus
Thirlwell and Peter Harris in their kitchen； is a good example of a business
based on meeting social needs。 It markets home…delivered luxury chocolates
but generates sales by having Tasting Clubs to check out products each
month。 The concept of the club is that you invite friends round and use the
firm’s scoring system to rate and give feedback on the chocolates。
Safety
The second most basic need of consumers is to feel safe and secure。 People
who feel they are in harm’s way； either through their general environment
or because of the product or service on offer； will not be over…interested in
having their higher needs met。 When Charles Rigby set up World Challenge
（world…challenge。uk） to market challenging expeditions to exotic
locations around the world； with the aim of taking young people up to
around 19 out of their fort zones and teaching them how to overe
adversity； he knew he had a challenge of his own on his hands： how to
88 The Thirty…Day MBA
make an activity simultaneously exciting and apparently dangerous to
teenagers； while being safe enough for the parents writing the cheques to
feel fortable。 Six full sections on its website are devoted to explaining
the safety measures that the pany takes to ensure that unacceptable
risks are eliminated as far as is humanly possible。
Physiological needs
Air； water； sleep and food are all absolutely essential to sustain life。 Until
these basic needs are satisfied； higher needs such as self…esteem will not be
considered。
You can read more about Maslow’s needs hierarchy and how to take it
into account in understanding customers o