Available or Closed Market
 
Before you segment your market or give any thought to how you perform on each of the 4 factors you must decide whether you are focusing on the available market or including the closed market.

The available market is the set of consumers who have interest, income and access to your market offer. A market can be defined as closed for several reasons, e.g. in-house activities, political factors and regulations etc.

Once you have decided to include or exclude the closed market you must imagine that chosen market as 100%
 
  Bargaining Power of Customers
  Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when:
  There is little differentiation over the product and substitutes can be found easily
  Customers are sensitive to price
  Switching to another product is not costly
   
  Bargaining Power of Suppliers
 
Suppliers are essential for the success of an organisation. Raw materials are needed to complete the finish product. Suppliers do have power, a power that comes from:
  If they are the only supplier or one of few suppliers who supply that particular raw material
  If it costly for the organisation to move from one supplier to another (known also as switching cost)
  If there is no other substitute for their product
 
  Business Design Conclusions
  Following questions should be considered when completing the Conclusion module of the Business Design Phase within BusinessMap.
 
  Business Drivers
 
Methods of control must be designed to ensure that the strategy implementation is successful. Control concerns both the efficiency with which the strategy is put into operation and the ultimate effectiveness of that strategy. The Business Driver module within BusinessMap can be used as a performance measurement system that considers not only financial measures, but also customer, business process and learning measures. It can be used as a management system to implement strategy at all levels of the organisation by facilitating the following functions:
  Clarifying strategy – the translation of strategic objectives into quantifiable measures
 
Communicating strategic objectives – it can serve to translate high level objectives into operational objectives and communicate the strategy effectively throughout the organisation
 
Planning, setting targets and aligning strategic initiatives – achievable targets are set for each perspective and initiatives are developed to align efforts to reach the targets
 
Strategic feedback and learning – management receives feedback on whether the strategy implementation is proceeding according to plan and on whether the strategy itself is successful
 
  Business Environment
 

You should be aware of the characteristics of your business environment, including developments within the economy, the political/legal system, technology, the physical environment, demography, culture, and the social system. Developments in all these areas are important for the formulation of your strategy. Your strategy should address these key influences and be adjusted as circumstances within and around you change.

 
 

Business Insight Conclusions

    
 
Following questions should be considered when completing the Conclusion module of the Business Insight Phase within BusinessMap. Please refer to PDF file.
 
  Business Sector
 
This is the overall nature of your business, a major area of professional life in which your company operates. You are asked to assign your BusinessMap analysis to a specific Business sector. Each sector refers to the specific set of parameters (Business Drivers) which you will measure your company against when analysing your Current Market Position.
 
  Business Segment
  A business segment is anything that comprises a separate product, service or activity; or anything going to one group of homogeneous customers as opposed to another group; or anything where the main competitor you face is different; or anything that may have different profitability. Different segments may be defined by any of the following:
  Different products or services
  Different customers receiving the same product or service
 
Different regions receiving the same product, where the cost to serve the different geographical areas is differentfor each perspective and initiatives are developed to align efforts to reach the targets
  Different versions of the same product, distinguished by the degree of value added, quality or personal service involved
 
  BusinessMap®
  A registered trademark of BUSINESSWARE A/S. BUSINESSWARE is management applications for the strategic, tactical, and operational levels
 
  BusinessWare UK Ltd
  100% owned by BUSINESSWARE A/S, is responsible for the sale and support of BusinessMap outside Scandinavia.
 
  Closed or Available Market

    
  Before you segment your market or give any thought to how you perform on each of the 4 factors you must decide whether you are focusing on the available market or including the closed market.

The available market is the set of consumers who have interest, income and access to your market offer. A market can be defined as closed for several reasons, e.g. in-house activities, political factors and regulations etc.

Once you have decided to include or exclude the closed market you must imagine that chosen market as 100%.
 
  Company Ability
  Reflects the company‘s ability to fulfil the demands of the market. It involves services, distribution, references, image, etc
 
  Competitive Edge
  The company‘s ability to create an advantageous position for the customer by fulfilling criteria such as price, payment, delivery terms and warranty.
 
 

Competitive Rivalry
 
If entry to an industry is easy then competitive rivalry is likely to be high. If it is easy for customers to move to substitute products then again rivalry will be high. Generally competitive rivalry will be high if:
  There is little differentiation between the products sold between customers  
  Competitors are approximately the same size of each other  
  If the competitors all have similar strategies  
  It is costly to leave the industry hence they fight to just stay in ( exit barriers)  
 
 

Competitor Analysis
 
The ultimate aim of competitor analysis is to determine how a competitor might behave when faced with various environmental and competitive changes. Competitors represent a major determinant of corporate success and any failure to take detailed account of their strengths, weaknesses and strategies is likely to lead not just to a sub-optimal performance, but also to an unnecessary greater exposure to aggressive and unexpected competitive moves. Competitor analysis seeks to:
  Provide an understanding of your competitive advantage/disadvantage relative to your competitors‘ position
  Help in generating insight into competitors‘ strategies – past, present and future
  Give an informed basis for developing future strategies to sustain/establish advantages over you competitors
 
 

Competitor Benchmarking
 
The purpose of competitor benchmarking is to identify best practices that can be adopted to improve your own performance. Wining customers from your competitors requires that you serve them better than the competition. This may come about through identification of competitors‘ weaknesses. In BusinessMap you will therefore consider how competitors perform on each of the 4 factors used to analyse your own market share. What are their strengths and weaknesses? Where are you strong in comparison?

You will have the opportunity to estimate competitors' performance on each of the 4 factors, using your own score as a benchmark. Aim to obtain a Simulated Market Share figure that is equal or close to the Actual Market Share figure. The Difference column indicates whether the simulated market shares are above, below or matches the actual market share. A higher simulated market share figure may indicate that the competitor has yet to realise its full potential.
 
  Concentration Strategy
  A market segmentation strategy in which a company directs its marketing efforts towards a single market segment through one marketing mix.
 
  Consolidation
 
Refers to the bringing together and uniting of two or more segments in order to produce a consolidated picture of the overall performance.

BusinessMap enables you to obtain a consolidated picture of your performance and benchmark segments to compare performance and establish best practice. You can select any given number of segments to be benchmarked or consolidated, as well as the specific data. Different types of consolidation can be selected as long as the pertinent data have been entered or calculated. Please note that the Consolidation module is only relevant if you have entered data in more than one case.
 
  Consolidation Input
  Refers to the segments available for consolidation. You choose what segments to consolidate.
 
  Consolidation Type
 
Having selected the segments to be consolidated you have a number of options i.e. would you like to consolidate Market Share, Cost Analysis, Investment etc.
 
  Contribution
 
The difference between sales revenue and direct costs, from which fixed costs (or indirect costs) must then be met, the remainder being profit. The contribution margin is calculated as a percentage using the formula: Contribution margin = (Contribution * 100) / Sale
 
  Corporate Strategy
  The strategy that determines the means for utilising resources in the areas of production, finance, research and development, personnel and marketing to reach the company‘s goals.
 
  Customer Orientation
  An approach to marketing in which a marketer tries to provide a marketing mix that satisfies the needs of buyers in the target market.
 
  Customer Portfolio Planning
 

Winning competitors‘ customers requires that you serve them better than the competition. This may come about through identification of competitor weaknesses, or through better exploitation of your own strengths and competencies. Not all customers will be equally worth the effort needed for them to increase the amount they spend with your. It is important to target customers of sufficient value (current or potential) to warrant the investment in creating a relationship with them. Each of the elements of the marketing mix could be used to offer customer added value. The marketing mix is the means by which the company translates its strategy from a statement of intent to effort in the marketplace.

It is important to analyse and plan your Customer Portfolio. In BusinessMap we help you focus on the right customers by analysing customers on two fronts, their attractiveness and your ability to serve the particular customer. Attractiveness and Our Ability to Serve are each made up of five factors. You will assign each factor a score using the scale 1 (worst) to 5 (best).
 
  Defend Strategy
 

Market leaders must continuously defend their current position against competitors. A defend strategy can be very aggressive. P.Kotler, Marketing Management, talks of 6 military defense strategies that a dominant company can use:
  Position Defence
  Flanking Defense
  Preemptive Defence
  Counter Offensive Defense
  Mobile Defense
  Contraction Defense
 
 

Dialogue Box

  The small “windows” that pop up in BusinessMap when the user is required to enter data, make selections etc. are called dialogue boxes. To move between fields in the box use the mouse, or press Tab (forward) or Shift-Tab (backwards).
 
  Direct Marketing
  Occurs when a consumer is exposed to a non-personal medium (such as direct mail ads, television, radio, magazines) or contacted by telephone and then orders by mail or telephone.
 
  Embedment and Communication
 

The involvement and support of people who will be affected by the changes in strategy must be considered, and the implications of the new strategies and changes should be communicated and involvement sought. The best strategic plans in the world are not likely to be successful if they are not effectively communicated to those who must implement them: the employees. In BusinessMap we ask you to consider how you intend to communicate and secure the successful embedment of your strategy. You will consider issues such as:

  How do you intend to communicate your proposal to all employees involved or affected?
  How can you secure the necessary employee backing and support?
  Is there a clear definition of responsibility?
 
  Estimate your Market Share (The Four Factors)
 

Do you know your market share? Do you understand why you have the market share that you do? These are some of the questions we at BUSINESSWARE have asked our customers over the last 20 years. Both questions are essential if you wish to be able to influence your company's future market position. In the early 1980s Dann Brandt Laursen, who worked as a researcher at one of the Danish Universities, completed a three-year research project. The objective of the research project was to develop a tool that would enable companies to:

  Estimate their market share
  Gain a better overview of market opportunities
  Gain a better foundation on which to make marketing decisions
 

The result of the research project was the four factors, or the Industrial Market Map as it is also known. The Industrial Market Map is built upon the concept that 4 factors have a significant influence on a company‘s market share.
  Market Awareness (MA)
  Product Acceptance (PA)
  Company Ability (CA)
  Competitive Edge (CE)
 
The idea is that you score your company‘s performance on each of the four factors and when multiplying the 4 percentages you will get an estimated market share. Understanding how the 4 factors influence– your market share and evaluating– your performance accordingly provides you with a clear overview of your company strengths, weaknesses and strategic capabilities. There follows a broad outline of the 4 factors and how these can be used to estimate your market share.
 
 
Market Awareness
Out of 100 potential customers how many of these know of you and could potentially do business with you? The figure below illustrates that in this example out of 100 potential customers, 70 know of you. You can thus exclude 30% of the total market.
 
 
 
Product Acceptance
"If our product/service does not meet customers‘ requirements they will not buy from us”. Of the remaining market, 90% feel that your product meets their requirements. Product Acceptance is thus estimated at 90% and you can exclude 10% of the remaining market.
 
 
  Company Ability
“If we do not match the customers‘ expectations they will not do business with us”. Of the remaining market, 60% feel that you match their expectations as a supplier. Consequently, you can exclude 40% of the remaining market.
 
 
  Competitive Edge
"If our price and trading conditions are not competitive the customer will not do business with us". Of the remaining market, 50% consider your price and trade conditions competitive. Consequently, you can exclude 50% of the remaining market.
 
 
 

The Estimated Market Share
The market share is calculated by multiplying the four factors as illustrated below. Understanding how the 4 factors influence– your market share and evaluating– your performance accordingly, provides you with a clear overview of company‘s strengths and weaknesses. In the example below you perform a lot stronger on Product Accecptance (PA) than you do on Competitive Edge (CE).

To increase your market share at least one of the drivers need to show an improvement. The method also enables you to assess the strategic capability of your segment, e.g. can you realistically improve any of the Market Share Drivers? Such considerations are necessary if sensible choices of future strategies are to be made.
 
 

In BusinessMap we have taken the four factor concept a step further and developed a default questionnaire that contains 10 questions relating to each factor. The questions are modified to fit individual companies and when applied correctly they become the company's Key Performance Indicators. The first screen shot below is an example of 10 questions relating to Market Awareness. The second screen shot illustrates how the four factors are multiplied to calculate a company's market share.