Markets and Competitive Space

Deregulation Excess global capacity Global competition Mergers & Acquisitions New Technology Changing customer expectations Disintermediation Demographics shifts Changing life & work styles

Markets and Competitive

Space

Markets and Competitive

Space

Chapter Three

Marketing Management 2

Drivers of Change

• Deregulation

• Excess global

capacity

• Global competition

• Mergers &

Acquisitions

• New Technology

• Changing customer expectations

• Disintermediation

• Demographics shifts

• Changing life & work styles

Product Market Structure

• Generic Product

market

– Product-type

product-market

– Product Variants

• Scope of

product-market

– Basis for identifying

buyers

– Market size &

characteristics

– Brand or product

categories competing

Marketing Management 4

SUPER

MARKETS

MICROWAVE

OVENS

CONVENIENCE

STORES

TRADITIONAL RESTAURANTS

Product-Market Structure Product-Market Structure

FAST-FOOD MARKET

• 1 Functions or uses of the

product

• 2 The enabling technology of the

product

• 3 Customer segments in the

product-market

Three characteristics of

markets

Three characteristics of

markets

Marketing Management 6

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 K Product 19

Identifying and Describing Buyers

How Buyers Make Choice

s

Building

Customer

Profiles

Environmental

Influences

DESCRIBING

AND ANALYZING END-USERS

Marketing Management 8

Building Customer Profiles

• Start with generic product – market

• Move next to product- type and variant

profiles >> increasingly more specific

(e.g targeting, positioning, market

segmentation etc.)

ANALYZING COMPETITION

1.

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

Marketing Management 10

Industry Analysis

Industry Analysis

• Descriptive profile of

the industry

(Horizontal)

– Characteristics

– Practices

– Consolidation trends

– Operating practices

• Strengths &

Weaknesses

– Strategic Alliances

• Analysis of the

value-Chain (Vertical Network)

– Vertical Integration – Distribution practices – Outsourcing

– Assistance in

information gathering

FORCES THAT DETERMINE INDUSTRY COMPETITIVNESS

Threat of new entrants

Bargaining

strengths

Of suppliers

Rivalry among existing firms in

industry

Bargaining strengths

Of buyers

Threats of substitute

products

Marketing Management 12

Extent of Market Coverage

Customer Satisfaction

Current

Capabilities

Past Performance

Competitor Evaluation

Describing and Evaluating the Competitor

Describing and Evaluating the Competitor

Identifying New Competitors

Identifying New Competitors

• Companies competing in a related product

market

• Companies with related technology

• Companies targeting similar customer groups

• Companies in other geographical regions with similar products

Marketing Management 14

Reasons for firms to enter a given

market

Reasons for firms to enter a given

market

• High profit margins are

being achieved

• Future growth opportunities

• No major market entry

barriers

• Few competitors

• Ability to gain a competitive

advantage

MARKET SIZE ESTIMATION

Unrealized

Sales

Potential

Company Sales

Industry Market Forecast

Market Potential

Estimate

Product-Market Forecast

Relationships

(area denotes sales in $’s)

Marketing Management 16

Sales Forecasting Methods

• Subjective Methods

– User Expectation

– Sales force

composite

– Jury of executive

opinion

• Delphi Technique

• Objective Methods

– Test markets – Time series

• Naive

• Moving Average

• Exponential Smoothing

• Extrapolation

– Statistical demand

analysis

• Regression

• Leading Indicator

• Econometric Methods