Session 16 MG 220 MBA - 11 Oct 10


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Session 16
MG 220 Marketing Management
MBA 10

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Session 16 MG 220 MBA - 11 Oct 10

  1. 1. MG 220 Marketing Management MBA 10 Fall 2010 Muhammad Talha Salam, Asst. Professor Access it online: Part 4: Building Strong Brands > Product Life-Cycle Marketing Strategies > PLC Critique & Market Evolution > Competitive forces > Identifying Competitors > Analyzing Competitors Class Presentation | Session 16 | 11 Oct 2010
  2. 2. Access it online: Product Lifecycle Marketing Strategies 1: Introduction & Pioneer Advantage | 2: Growth • Introduction Stage & Pioneer Advantage – Profits are low or negative – Promotional expenditure – to – sales ratio: very high – Because of need to announce & establish – Being first is both rewarding and risky – Pioneer advantage: if brand satisfies needs, strong recall – First mover advantage but segment-by-segment invasion is required • Growth Stage – Rapid climb in sales & New competitors enter – Price same or slightly increased – Promotional expenditure: same or slightly increased to counter new competitors & further educate market – Profits increase because costs are covered over a larger volume of sales – Firm uses several strategies to: • Improve product quality & adds new features | add new models | enter new market segments | increase distribution coverage MG 220 Marketing Management 2
  3. 3. Access it online: Product Lifecycle Marketing Strategies 3: Maturity | 4: Decline • Maturity – Much longer period | Most products are in this phase – Sale growth is generally slow – Three stages in maturity phase: growth | stable | decaying – Strong competition starts & competitors are finding new areas to work in • Market modification: converting non-users and entering new market segments • Product modification: Quality, feature, style improvement • Marketing Program modification: Reviewing marketing strategies including 4Ps • Decline Stage – Several reasons: technological advances | shifts in consumer tastes | inc. competition – Increased price-cutting & profit erosion – Decline may be slow – Firms may withdraw market as well – Choosing between divesting (abandoning product line) and harvesting (gradually reducing product/business’s costs while trying to maintain sales) MG 220 Marketing Management 3
  4. 4. Access it online: PLC Critique & Market Evolution • PLC: Critique – PLC patterns are too varied in shape and duration – Its very hard to determine which stage it is – Also, decline or growth may be because of some anomalous factors • Market Evolution – Market-oriented picture vis-à-vis PLC’s product-oriented one – Markets evolve through 4 stages: • Emergence – Market exists as a latent market initially. Launching a new product begins emergence • Growth – If new product sells well, competitors enter and grow the market • Maturity – Eventually all segments are covered. Competitors compete fiercely and everyone’s profits decline • Decline – Demand for product begins to decrease may be because of a new technology MG 220 Marketing Management 4
  5. 5. Access it online: Competitive Forces • Michael Porter’s Five Forces Model 1. Threat of intense segment rivalry INDUSTRY COMPETITORS’ intense rivalry can make a segment unattractive 2. Threat of new entrants Depending on what kind of entry & exit barriers exist If both are high: profits are high and risks are high too If entry is high but exit is low: firms enter If both are low: returns are low and stable 3. Threat of substitute products If there are actual or potential substitute products 4. Threat of buyer’s growing bargaining power If buyers possess strong or even growing bargaining power, it can erode margins 5. Threat of suppliers’ growing bargaining power If suppliers can raise prices or reduce quantity supplied and have bargaining power it can make an industry unattractive MG 220 Marketing Management 5
  6. 6. Access it online: Identifying Competitors • Taking a broad view of competitors is very important - examples • Two key views of Competition • Industry concept of competition – Industry is a group of firms that offer a product or class of products that are close substitutes for one another – Industries are classified according to: – Number of sellers & Degree of Differentiation • Pure Monopoly – Only one firm provides product/service in a category or area – E.g. PTCL (previously) or LESCO in Lahore etc. • Oligopoly – Few (generally large) companies in same category – E.g. OMCs in Pakistan • Monopolistic Competition – Many competitors able to offer and differentiate their offer – Fast food industry in Pakistan • Pure Competition – Too many competitors offer same product and compete at same level – Commodity market / stock market etc. MG 220 Marketing Management 6
  7. 7. Access it online: Identifying Competitors • Industry concept of competition (…contd) – Entry, mobility & Exit barriers • Entry barriers (how easy it is to enter a market) • Mobility barriers (how easy it is to move to attractive segments) • Exit barriers (how easy it is to move out) – Cost Structure • Some industries are capital intensive e.g. steel manufacturing – Degree of Vertical Integration – Degree of Globalization • Market Concept of Competition – Marketers need to stay away from ‘marketing myopia’ and identify direct & indirect competitors – A broad set of competitors exist need to be profiled carefully – Examples MG 220 Marketing Management 7
  8. 8. Access it online: Analyzing Competitors • Strategies – Strategic Group: a group of firms following same strategy in a given market • Objectives – Generally competitors try to maximize profits – But other concepts may also exist and may be followed e.g. short-term or long-term profits – An alternative assumption: Companies pursue a mix of strategies, profit, market share growth, tech leadership etc. MG 220 Marketing Management 8
  9. 9. Access it online: Analyzing Competitors • Strengths & Weaknesses – Monitoring competitors’ strengths & weaknesses – Three variables • Share of market (%age share) • Share of mind (name brand coming to your mind for a category) • Share of heart (brand you ll prefer to buy for a category) – Companies gaining share of mind and share of heart eventually gain share of market • Selecting Competitors – How to select competitors • Strong vs. weak • Close vs. Distant • “Good” vs. “Bad” MG 220 Marketing Management 9
  10. 10. MG 220 Marketing Management MBA 10 Fall 2010 Muhammad Talha Salam, Asst. Professor Access it online: Part 4: Building Strong Brands > Competitive Strategies for Market Leaders > Other Competitive Strategies > Balancing Customer & Competitive Orientations > LEFTOVER TOPIC FROM CHAP 10: Devising Brand Strategy > Case Study 1: ABN AMRO (Class Discussion) > Quiz 5: Part 4 (Chap 9 & 10 – 12/ed. OR Chap 10 & 11 – 13/ed.) Class Presentation | Session 17 | 13 Oct 2010