Chapter 3 - Markets and Competitive Space

  • 478 views
Uploaded on

 

More in: Marketing , Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
478
On Slideshare
0
From Embeds
0
Number of Embeds
5

Actions

Shares
Downloads
18
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Chapter Three Markets and Competitive Space
  • 2. MARKETS AND COMPETITIVE SPACE  Markets and Strategies  Product-Market Scope and Structure  Describing and Analyzing End- Users  Analyzing Competition  Developing a Strategic Vision about the Future
  • 3. MARKETS AND COMPETITIVE 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
  • 4. MARKETS AND STRATEGIES Markets and Strategies are Interlinked Forming a Shared Vision Value Migration Challenges
  • 5. • Market changes often require altering strategies • Forces of change create both market opportunities and threats • Inherent danger in faulty market sensing Markets Impact Strategies
  • 6. • Customers shift purchasing to new business designs with enhanced value offering • Beware of disruptive technologies • Market sensing and organizational learning are essential Value Migrations
  • 7. PRODUCT-MARKET SCOPE AND STRUCTURE Matching Needs with Product Benefits Product-Market Boundaries and Structure Forming Product-Markets for Analysis The Changing Composition of Markets
  • 8. Matching Needs with Product Benefits • A 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.
  • 9. INNOVATION FEATURE • In the period 1994 to 2004, Progressive Insurance increased sales from $1.3 billion to $9.5 billion, and ranks high in the Business Week Top 50 U.S. companies for shareholder value creation. • The company invents new ways of providing services to save customers time, money and irritation, while often lowering costs at the same time. • Loss adjusters are sent to the road accidents rather than working at head office, and they have the power to write checks on the spot. • Progressive reduced the time needed to see a damaged automobile from seven days to nine hours. • Policy holders’ cars are repaired quicker, and the focus on this central customer need has won much automobile insurance business for Progressive. • These initiatives also enable Progressive to reduce its own costs – the cost of storing a damaged automobile for a day is $28, about the same as the profit from a six-month policy. Progressive Insurance: Customer Needs at the Center of Strategy Source: Adapted from Mitchell, Adrian (2004)”Heart of the Matter,” The Marketer, June 12, 14.
  • 10. Product – Market Boundaries and 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
  • 11. SUPER MARKETS MICROWAVE OVENS CONVENIENCE STORES TRADITIONAL RESTAURANTS Illustrative Fast-Food Product-Market Structure FAST-FOOD MARKET
  • 12. Forming Product – Markets for Analysis Factors influencing product – market boundaries:  Purpose of analysis  Changing composition of markets  Extent of market complexity
  • 13. The Changing Composition of Markets • Change due to new technologies and emerging competition • Consider existing and emerging markets • Identify alternative ways to meet needs • Extend product-market analysis beyond industry boundaries (e.g. Fast-foods)
  • 14. 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
  • 15. Illustrative Product – Market Structure •Generic Product Class •Product Type •Variant A Regular •Variant B •Brands Food and beverages for breakfast meal Cereals Ready to eat Natural Pre-sweetened Life Nutritional Special KProduct 19
  • 16. DEFINING AND ANALYZING 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
  • 17. Identifying and Describing Buyers How Buyers Make Choices Building Customer Profiles Environmental Influences DESCRIBING AND ANALYZING END-USERS
  • 18. Identifying and Describing 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
  • 19. How Buyers Make Choices  BUYING DECISION PROCESS: 1. Problem recognition 2. Information search 3. Alternative evaluation 4. Purchase decision 5. Post-purchase behavior
  • 20. Environmental Influences • 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
  • 21. Building Customer Profiles • 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.)
  • 22. ANALYZING COMPETITION 1. Define Industry Structure and Characteristics 2. Identify and Describe Key Competitors 5. Identify New Competitors 3. Evaluate Key Competitors PRODUCT- MARKET STRUCTURE AND MARKET SEGMENTS 4. Anticipate Actions by Competitors
  • 23. Examples of Levels of Competition Diet-Rite Cola Diet PepsiDiet Coke Product from competition: diet colas Regular colas Diet lemon limes Lemon limes Fruit flavored colas Product category competition: soft drinks Bottle water Wine Beer Coffee Juices Generic competition: beverages Baseball cards Fast Food Video Games Ice Cream Budget competition: food & entertainment
  • 24. Industry 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
  • 25. Defining Industry Structure & Characteristics Industry Form Industry Environment Competitive Forces Value Added Chain SUPPLIERS PRODUCERS WHOLESALERS/ DISTRIBUTORS RETAILERS/DEALERS CONSUMER/ ORGANIZATIONAL END USERS
  • 26. Competitive Forces 1. 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.
  • 27. Key Competitor Analysis • 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)
  • 28. Extent of Market Coverage Customer Satisfaction Current Capabilities Past Performance Competitor Evaluation
  • 29. DEVELOPING A STRATEGIC VISION 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.
  • 30. MARKET SIZE ESTIMATION Unrealized Potential Company Sales Forecast Industry Sales Forecast Market Potential Estimate Product-Market Forecast Relationships (area denotes sales in $’s)
  • 31. 0 100 200 300 400 500 600 700 800 900 Sales (in 1000s of units) 2001 2002 2003 2004 2005 2006 2007 2008 Market Potential Sales Forecast Company XYZ Sales Forecast Product-Market Forecast Relationships for Industrial Painting Units