Presentation Transcript

1. The Competitive Market

   BMI3CC
2. 4 Ps and 2 Cs of Marketing The study of marketing can be narrowed down to the 4 Ps and 2 Cs 4 Ps: Product Price Placement Promotion 2 Cs: Customer/Consumer Competition We spent a few days studying consumers, now we will learn about competition
3. The Benefits of Competition BRAINSTORM – Why is competition good for consumers? Why is competition good for companies?
4. The Benefits of Competition Increased Selection Alternative Choices – i.e. bad service Better Prices Increased Productivity Product Improvements Technology Advancements
5. Competition in a Free Market In a free market, businesses can make a profit. Profit drives business; the more successful a business becomes, the more profit the owner keeps. (private property) Competition is allowed and defines the structure of market
6. Four major market structures Perfect competition - large # of small companies; nobody controls market Agricultural Market, eBay Monopolistic Competition – large # of companies; each of them has an opportunity for market control Most products e.g. detergent, fast food Oligopoly - small # of large companies, each with a substantial amount of market control Banking Industry, Apple, Microsoft, Android Monopoly – a single company has complete market control Hydro, LCBO
7. Types of Competition Direct competition Products that are similar Consumers choose among products in the same category Indirect competition Every business is in competition with every other business for consumers’ discretionary income.
8. Example: INDIRECT COMPETITION DIRECT COMPETITION
9. In-Class Task – 10 minutes Pg. 88  3 b & c
10. Competitive Advantage Businesses look for advantages over their competition. A true advantage is one that is sustainable over the long term. Sustainable competitive advantages: methods by which a business holds on to its customers, in spite of the competition (ideas?)
11. Under the influence “Tales of customer service” Read the article Answer the following questions: List three extraordinary examples of customer service. What was the point of Nancy writing the letters? What did the results show? How does a restaurant that is rated 10th best food, and worse for decore, end up rated 3rd best restaurant in Manhatten? What happened when a Chevy dealership matched the Disney model of customer service? Summarize this article in 5 or fewer words.
12. Sustainable competitive advantages Create a unique selling proposition (USP) – patented design, licensed products Lowering production costs: cost-efficient, high technology manufacturing systems Servicing a niche market – keep competitors out of that market Create customer loyalty – relationship marketing
13. Non-sustainable competitive advantages Non-SP used by competitors to shift sales in their direction Promotion: “top of mind” Placement: more placement=more competitive (Chapters – category killer) Quality Benefits of use: do more and better than other products Price: all features being equal… Design features: catch consumers’ interest – product design
14. Activity! Before entering a market, marketers must study the competition. One way of doing so is by preparing a competitive analysis of the sustainable and non-sustainable advantages that the major competitors have. In this activity, you will develop a comparative analysis for a marketer in the video game market.
15. Activity Time – try it for yourself! Competitive Advantages Sony Play Station 4 Microsoft’s Xbox One Sustainable Unique Selling Position Niche Cost Advantage Customer loyalty Non-sustainable Promotion Placement Quality Benefits of Use Price Product’s design features
16. Competitive Advantages Sony Play Station 2 Microsoft's Xbox Sustainable Unique Selling Position Yes. System doubles as a CD and DVD player.  Yes. Ethernet port for rich, fast-action online gaming via a broadband connection. Niche No. Video game systems are very popular. No. Video game systems are very popular. Cost Advantage No. All manufacturers of video game systems have access to inexpensive electronic components produced in countries with cheaper labour costs. No. All manufacturers of video game systems have access to inexpensive electronic components produced in countries with cheaper labour costs.  Customer loyalty Yes. Sony Play Station is better known. Consumers are familiar with it. Many have used Sony Play Station 1 for years.  No. This is Microsoft's first venture into this market.  Non-sustainable Promotion Yes. Sony promoted its new product in time for Christmas gift giving. Yes. Introduced and well promoted by Bill Gates. Placement Yes. In stores and online at the Sony Store. Yes. In major stores and online. Quality No. Both products have equally high quality.  No. Both products have equally high quality. Benefits of Use Yes. Games for Play Station 1 can be used as well as a wide selection of new games for this system. Doubles as a DVD and CD player. Yes. 67 games now available. Many games are educational in nature. Price Yes. U.S. $299.99. No. Introductory price was much higher. Product's design features No. 128 bit, 300 Mhz processor. No. Video system delivers the most realistic games.
17. Service Competition Some Businesses offer services: Fed Ex, Moving companies) Others offer Value – Added Services:support the sale of a product or other service. Both service businesses and businesses that offer value-added services market intangibles. (hair salons, dentists, personal trainers)
18. Service Competition Service companies are in competition with other companies that perform the same service. e.g., UPS vs. FedEx Convenience Internet shopping, ease of use Degree of service e.g., Barber vs. Hair Salon Selection Reputation Price
19. Convenience Making some activity easier or more comfortable. Some services actually sell convenience.
20. DegreeofService offers more services (full service salon/spa) or fewer services (West Jet, Ikea)
21. Selection Offering a greater selection of services Wide – a store carries a wide array of different brands of types of merchandise or it can be Deep – a store carries a large quantity of one specific product or type of product. See page 103
22. Reputation Important for a service business to maintain a good reputation because it does not have a tangible product to show the customer (word of mouth, professional reviews)
23. Price If two services are similar, the business with the lower price has the competitive edge. However, in some cases, consumers may question services with prices that seem ‘too low’. Price depend on supply & demand
24. Product/Service Mix Retail & wholesale businesses are part of the service sector, providing a service to both the consumer and to the manufacturer…
25. Measuring Results We compare within certain market segments to understand how a company performs vs. the competitive set. (Direct Competition) How it is Measured: Market Share – what % of the category or sector sales is a certain brand Example: Ready to Drink, Chilled Fruit Juice Market
26. 18% market share Market follower – how to increase market share from leader? Example: 59% market share Market leader – how to sustain position over compeititors?
27. Competing within Sectors How can a company improve MARKET SHARE?
28. A company can increase market share in one of two ways: increase the size of the overall market E.g. Drink more juice take sales away from its competitors. Other promotion effort School Cafeteria, etc.
29. International Competition What do you think the impact has been of the internet with international competition? Multinational Corporations Does business in more than one country Some large MNCs have budgets greater than an entire country’s wealth! Trend of “micro-multinationals” = small businesses enabled by technology
30. INTERNATIONAL International-based products/companies Produced outside of North America International Competition DOMESTIC Canadian products Domestic production or international production May want to expand internationally for future growth Factors to consider with International Competition
31. Factors to consider with International Competition Regulations Promotion restrictions / local laws Research Consumer preferences / consumer needs Distribution How will it be sold? Local partners? Pricing Covering expenses, plus tariffs Design Legal standards + local taste
32. Competing in International Markets Businesses use the same methods to compete in international markets that they use in domestic markets: promotion, placement, quality, benefitsofuse, price & design Business must tailor its competitive efforts to the foreign market customs and preferences.
33. Culture It is important to consider factors such as climate and religious beliefs when considering entering a foreign market. For example, there is no market for Canadian pork in Israel, as Jewish culture forbids eating this product.
34. The name Coca-Cola in China was first rendered as Ke-ke-ken-la. Unfortunately, the Coke company did not discover until after thousands of signs had been printed that the phrase means "bite the wax tadpole" or "female horse stuffed with wax" depending on the dialect. Coke then researched 40,000 Chinese characters and found a close phonetic equivalent, "ko-kou-ko-le," which can be loosely translated as "happiness in the mouth."
35. Volkswagen Named the sedan version of Golf the Jetta. However, the letter "J" doesn't exist in the Italian alphabet, so Jetta is pronounced "Ietta", which means Misfortune...
36. IKEA Sells this workbench as the FARTFULL. Swedish is a Germanic language, and "Fährt" is German for travel, so "fartfull" is being used here to suggest mobility. Swedish has several words for fart, but one of them is "Fjärt", which strikes as close enough that their marketing department knew what it was doing. If even bad press is good public relations, then this is a case of allowing an ill wind to blow some good.
37. Pepsi In Taiwan, the translation of the Pepsi slogan "Come alive with the Pepsi Generation" came out as "Pepsi will bring your ancestors back from the dead."
38. Promotion is challenging in international markets. In many cases, a Canadian promotion may not translate well in other countries Distribution of products in other countries can also be difficult. Canadian firms may set up their own offices in other countries, or they may enter into joint ventures.
39. Joint Venture A Canadian firm and a foreign business with similar goals combine resources (money, facilities, distribution networks) to make or sell a specific product in another country
40. Tariffs are taxes placed on goods being imported into a country in order to protect the local industries from too much foreign competition. Marketers must also be able to calculate the landedcost of the product which takes into account the shipping costs and the currency exchange as well as tariff rates.