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to　consumer　has　the　potential　to　add　value　or　kill　the　deal。　For　example；　
at　the　heart　of　the　Amazon　business　proposition　are　a　superlatively　
efficient　warehousing　and　delivery　system　and　a　simple　zero…cost　way　for　
customers　to　return　products　they　don’t　want　and　get　immediate　refunds。　
These　factors　are　every　bit　as　important　as　elements　of　Amazon’s　marketing　
strategy　as　are　its　product　range；　website　structure；　Google　placement　or　its　
petitive　pricing。　
Marketing　is　also　a　circuitous　activity。　As　you　explore　the　topics　below；　
you　will　see　that　you　need　the　answers　to　some　questions　before　you　can　
move　on；　and　indeed　once　you　have　some　answers　you　may　have　to　go　
back　a　step　to　review　an　earlier　stage。　For　example；　your　opinion　as　to　the　
size　of　the　relevant　market　may　be　influenced　by　the　results　achieved　when　
you　segment　the　market　and　assess　your　petitive　position。　
GETTING　THE　MEASURE　OF　MARKETS　
The　starting　point　in　marketing　is　definition　of　the　scope　of　the　market　you　
are　in　or　are　aiming　for。　This　es　from　the　business　objectives；　mission　
and　vision　that　form　the　heart　of　the　strategy　of　the　enterprise。　These　are　
topics　covered　in　Chapter　12　on　strategy。　For　most　MBAs　for　most　of　the　
time　these　will　be　a　‘given’　and　as　such　will　not　inhibit　your　ability　to　apply　
the　marketing　concepts　explored　in　this　chapter。　So；　for　example；　if　you　
are　working　in；　say；　Body　Shop；　McDonald’s；　IBM；　a　Hospital　Trust　or　the　
Prison　Service；　the　broad　market　thrust　of　your　current　business　will　be　
self…evident。　Later　you　may　want　or　need　to　change　strategic　direction；　but　
effective　marketing　is　concerned　fundamentally　with　dealing　with　a　defined　
product　（service）/market　scope。　These　concepts　apply　to　any　marketing　
activity；　but　you　will　find　that　understanding　them　is　made　easier　by　
applying　them　to　the　business　you　are　in；　or　have　some　appreciation　of。　
Assessing　the　relevant　market　
Much　of　marketing　is　concerned　with　achieving　goals　such　as　selling　
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　
Bran