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Topic : 2 Markets and Competitive Space. Dr. Ehsanul Huda Chowdhury. Markets Impact Strategies. Market changes often require altering strategies Forces of change create both market opportunities and threats Inherent danger in faulty market sensing. Value Migrations.

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topic 2 markets and competitive space
Topic : 2Markets and Competitive Space

Dr. Ehsanul Huda Chowdhury

markets impact strategies
Markets Impact Strategies
  • Market changes often require altering strategies
  • Forces of change create both market opportunities and threats
  • Inherent danger in faulty market sensing
value migrations
Value Migrations
  • Customers shift purchasing to new business designs with enhanced value offering
  • Beware of disruptive technologies
  • Market sensing and organizational learning are essential
product market scope and structure
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
matching needs with product benefits
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.

innovation feature
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.

defining and analyzing markets
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

product market boundaries and structure
Product – Market Boundaries and Structure
  • Determining Product-Market Structure
  • Start with the generic need satisfied by the product category of interest to management
  • Identify the product categories (types) that can satisfy the generic need
  • Form the specific product – markets within the generic product – market
slide9

SUPER

MARKETS

MICROWAVE

OVENS

TRADITIONAL

RESTAURANTS

CONVENIENCE

STORES

Illustrative Fast-Food Product-Market Structure

FAST-FOOD MARKET

illustrative product market structure
Illustrative Product – Market Structure

Food and beverages

for breakfast meal

  • Generic Product Class

Cereals

  • Product Type
  • Variant A

Ready to eat

Regular

Natural

  • Variant B

Pre-sweetened

Nutritional

  • Brands

Life

Product 19

Special K

slide11

Identifying and

Describing Buyers

DESCRIBING

AND

ANALYZING

END-USERS

How

Buyers

Make

Choices

Building

Customer

Profiles

Environmental

Influences

identifying and describing end users
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
    • Type of products
how buyers make choices
How Buyers Make Choices
  • BUYING DECISION PROCESS:
    • Problem recognition
    • Information search
    • Alternative evaluation
    • Purchase decision
    • Post-purchase behavior
environmental influences
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
building customer profiles
Building Customer Profiles
  • Start with generic product – market
  • Move next to product- type and variant profiles >> increasinglymore specific
  • Customer profiles guide decision making (e.g. targeting, positioning, market segmentation etc.)
slide16

ANALYZING COMPETITION

1.Define Industry Structure and Characteristics

2. Identify and Describe Key Competitors

5. Identify

New

Competitors

PRODUCT-

MARKET

STRUCTURE

AND

MARKET

SEGMENTS

4. Anticipate

Actions by

Competitors

3. Evaluate

Key

Competitors

industry analysis
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
defining industry structure characteristics
Defining Industry Structure & Characteristics

SUPPLIERS

  • Industry Form
  • Industry

Environment

  • Competitive

Forces

PRODUCERS

WHOLESALERS/ DISTRIBUTORS

Value

Added

Chain

RETAILERS/DEALERS

CONSUMER/ ORGANIZATIONAL END USERS

competitive forces
Competitive Forces
  • Rivalry among existing firms.
  • Threat of new entrants.
  • Threat of substitute products.
  • Bargaining power of suppliers.
  • Bargaining power of buyers.

Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.

key competitor analysis
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)
slide21

Extent of

Market Coverage

Competitor

Evaluation

Current

Capabilities

Customer

Satisfaction

Past

Performance

market size estimation
MARKET SIZE ESTIMATION

Product-Market Forecast Relationships(area denotes sales in $’s)

Market Potential

Estimate

Unrealized

Potential

Company

Sales

Forecast

Industry

Sales

Forecast