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3-2 MARKETS ANDCOMPETITIVE SPACE Markets and Strategies Product-Market Scope and Structure Describing and Analyzing End-Users Analyzing Competition Developing a Strategic Vision about the Future Market Size Estimation
3-3MARKETS ANDCOMPETITIVE SPACE The Challenges ― Markets are increasingly complex, turbulent, and interrelated. Importance of a broad view of the market. Essential to develop a vision about how the market is likely to change in the future. Continuous Monitoring is Necessary to: Find promising opportunities Identify shifts in value requirements Understand competitors’ positioning Guide targeting and positioning decisions
3-4MARKETS ANDSTRATEGIES Markets and Strategies are Interlinked Forming Value a Shared Migration Vision Challenges
3-5Markets ImpactStrategiesMarket changes often require altering strategiesForces of change create both market opportunities and threatsInherent danger in faulty market sensing
3-6Value MigrationsCustomers shift purchasing to new business designs with enhanced value offeringBeware of disruptive technologiesMarket sensing and organizational learning are essential
3-7PRODUCT-MARKETSCOPE AND STRUCTUREMatching Needs with ProductBenefitsProduct-Market Boundaries andStructureForming Product-Markets forAnalysisThe Changing Composition ofMarkets
3-8 Matching Needs with Product BenefitsA product – market matches people with needs to the product benefits that satisfy those needs“A product – market is the set of products judged to be substitutes within those usage situations in which similar patterns of benefits are sought by groups of customers.”* *Srivastava, et al. (1984) Journal of Marketing, Spring, 32.
3-9Product – Market Boundariesand Structure Determining Product-Market Structure 1. Start with the generic need satisfied by the product category of interest to management 2. Identify the product categories (types) that can satisfy the generic need 3. Form the specific product – markets within the generic product – market
3-10Illustrative Fast-Food Product-Market Structure SUPER MICROWAVE MARKETS OVENS FAST-FOOD MARKETCONVENIENCE TRADITIONAL STORES RESTAURANTS
3-11Forming Product –Markets for Analysis Factors influencing product – market boundaries: Purpose of analysis Changing composition of markets - technology Extent of market complexity
3-12The ChangingComposition of MarketsChange due to new technologies and emerging competitionConsider existing and emerging marketsIdentify alternative ways to meet needsExtend product-market analysis beyond industry boundaries (e.g. Fast-foods)
3-13 Extent of Market Complexity Three characteristics of markets: 1. Functions or uses of the product 2. The enabling technology of the product 3. Customer segments in the product-market
3-14 Illustrative Product – Market Structure Food and beverages •Generic Product for breakfast meal Class Cereals •Product Type Ready to eat •Variant A RegularNatural •Variant B Pre-sweetened Nutritional Life Product 19 Special K •Brands
3-15DEFINING ANDANALYZING MARKETS Define Product-Market Boundaries and Structures Identify and Describe End- Users Analyze Industry and Value Added Chain Evaluate Key Competitors Forecast Market Size and Growth Trends
3-16 Identifying and Describing BuyersBuilding DESCRIBING How AND BuyersCustomer Make Profiles ANALYZING Choice END-USERS s Environmental Influences
3-17Identifying andDescribing End-Users Illustrative buyer characteristics in consumer markets: Family size, age, income, geographical location, sex, and occupation Illustrative factors in organizational markets: Type of industry Company size Location Type of products
3-18 How Buyers Make Choices BUYING DECISION PROCESS: 1. Problem recognition 2. Information search 3. Alternative evaluation 4. Purchase decision 5. Post-purchase behavior
3-19EnvironmentalInfluences External factors influencing buyers’ needs and wants: Government, social change, economic shifts, technology etc. These factors are often non-controllable but can have a major impact on purchasing decisions
3-20Building CustomerProfiles Start with generic product – market Move next to product- type and variant profiles >> increasingly more specific Customer profiles guide decision making (e.g. targeting, positioning, market segmentation etc.)
3-21 ANALYZING COMPETITION 1. Define Industry Structure and Characteristics 2. Identify 5. Identify and New PRODUCT- DescribeCompetitors MARKET Key STRUCTURE Competitors AND MARKET4. Anticipate SEGMENTS Actions by 3. EvaluateCompetitors Key Competitors
3-22Examples of Levels ofCompetition Baseball cards Bottle Video water Games Fast Food Regular Diet lemon Ice colas limes Cream Beer Diet-Rite Cola Fruit Diet Diet flavored Coke Pepsi Wine colas Product from competition: diet colas Lemon limes Juices Product category competition: soft drinks Coffee Generic competition: beverages Budget competition: food & entertainment
3-23Industry Analysis Industry size, growth, and composition Typical marketing practices Industry changes that are anticipated (e.g. consolidation trends) Industry strengths and weaknesses Strategic alliances among competitors
3-24Defining IndustryStructure &Characteristics SUPPLIERSIndustry FormIndustry PRODUCERSEnvironmentCompetitiveForces WHOLESALERS/ DISTRIBUTORS Value Added RETAILERS/ Chain DEALERS CONSUMER/ ORGANIZATIONAL END USERS
3-25 Competitive Forces1. Rivalry among existing firms.2. Threat of new entrants.3. Threat of substitute products.4. Bargaining power of suppliers.5. Bargaining power of buyers. Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.
3-26Key CompetitorAnalysis Business scope and objectives Management experience, capabilities, and weaknesses Market position and trends Market target(s) and customer base Marketing program positioning strategy Financial, technical, and operating capabilities Key competitive advantages (e.g., access to resources, patents)
3-27 Extent of Market Coverage Current Competitor CustomerCapabilities Evaluation Satisfaction Past Performance
3-28DEVELOPING A STRATEGICVISION ABOUT THE FUTURE Industry Boundaries Blurring and Evolving Competitive Structure and Players Changing Value Migration Paths Product Versus Business Design Competition Firms are Collaborating to Influence Industry Standards Source: C. K. Prahalad, Journal of Marketing, Aug. 1995, vi.
3-29MARKET SIZEESTIMATIONProduct-Market ForecastRelationships (area denotes sales in $’s) Market Potential EstimateUnrealized Potential Company Industry Sales Sales Forecast Forecast
3-30 Product-Market Forecast Relationships for Industrial Painting UnitsSales (in 1000s of units) 900 800 Market 700 Potentia l 600 Sales Forecast 500 400 300 200 Company XYZ Sales Forecast 100 0 2001 2002 2003 2004 2005 2006 2007 2008