Competitve Space (Marketing)

7/30/2019 Competitve Space (Marketing)

1/28

STRATEGIC MARKETING & PLANNING


2/28

Markets increasingly complex &competitive challenge for Marketing/Brand Managers;

Reasons:

1. Rapid technological changes &

2. Diversity of buyer preferences.

Broad view of market needed todevelop strategy not narrow focusbased on current products/ segments only.


3/28

The TelecomExample!!!

Telecom has allowed a

virtual world to emerge-

one in which time &distance are no longerbarriers to doing

business

orcommunicating.


4/28

Changing markets need strategyadaptations!

Digital technology eliminated PolaroidCameras!

What factors drive change?

Deregulation Globalization/ Global capacity/ Global

competition Mergers & acquisition Changing customer

expectations/preferences

Changing lifestyles


5/28

Value Migration is the shifting of valuecreating forces.

Three types of Value Migration:

1. Between industries (e.g. from airline toentertainment).

2. Between companies (e.g. CoralWordPerfect to Microsoft).

3. Between business designs within acompany (e.g. IBM: mainframe tosolutions & system integration).


6/28

Customers migrate or shift from olderproducts to new

looking for more value;

Value migration affects brand &companies.

Value migration ALSO highlights

need forconstant learning &implementing strategy changes.


7/28

Product benefits create markets &brands.

Brands are attempts to match benefitswith customers needs, better thancompetition.

Influence ofcompeting brand growsstronger if a product can be

substituted.


8/28

3. Product variants: compete mostdirectly.

2. Product type: products in same orsimilar category (minimal

differentiation) compete.

1. Generic level: products satisfying abroad category of need compete.

4. Shared budget:

compete indirectly.


9/28

Diet-Rite

Cola

DietPepsi

DietCoke

Category:Diet Colas

Regularcolas Diet lemon

limes

Lemonlimes

Fruitflavoredcolas

Category: Soft drinks

Bottlewater

Wine

Beer

Coffee

Juices

Generic competition:Beverages

Movieson DVD

FastFood

VideoGames

IceCream

Budget competition:food & entertainment


10/28

There are three consideration:

3. Extent of complexity of market:different technologies, product functionsor usage, & customer segments usingthe product.

2. Changing composition of market:effect of new technology, new arrivals,new needs created/ satisfied.

1. Depth of analysis a company desires:the deeper we go to discover newsegments, the bigger the marketbecomes.


11/28

FMCG companies use differentiation orlow-cost strategies in order to develop& maintain competitive advantage

but find it difficult, if not impossible. WHY?

Competitors overcome differentiation

through innovation & cost reductionthrough better systems & technology.


12/28

TWO BASES:

1. By analyzing the industry (looking at

the descriptor profile);

2. By analyzing the value chain (thatlinks together organizations in a value-

added system, extending from suppliersto end users).


13/28

Basis: Horizontal comparison withsimilar types of firms;

1. Characteristics & trends (sales volume,

growth trend, profitability);

2. Operating practices (products mix,systems, services, barriers to entry,

geographical spread). How is this done.?


14/28

1) Identifying companies,2) Studying structures,

3) Identifying reach whetherdomestic or

international;4) Identifying market practices

(conformist/ non-conformist);

5) Determine strengths & weaknesses,&

6) Identify strategic alliances.


15/28

How? Reviewing:

1. Suppliers/ distribution channels;2. Extent ofvertical integration

practiced;

3. Type ofrelationships betweencompanies - transactional orcollaborative;

4. Extent/ quality of outsourcing: 100%in case of Nike & Sara Lee (food,beverage, apparel);

5. Information/ feedback mechanism.


16/28

Different competitive forces are present

in the value-added chain.

Michael Porters FIVE COMPETITIVE

FORCES clearly outline these


17/28

Porters FIVE competitive forces:1. Rivalry among existing firms: intense

competition could lead to higherstandards (Coke & Pepsi);

2. Threat of new entrants: entry & exitbarriers;

3. Threat of substitutes: alternative

technologies can wipe out or endangerestablished companies (EncyclopediaBritannica/ Kodak/ Polaroid);


18/28

4. Suppliers bargaining power: rawmaterials, finished goods;

5. Bargaining power of buyers (e.g.Supermarket chains).


19/28

Rapid expansion in competitiveintelligence gathering seen in the last10 to 15 years;

Major global companies like Microsoft,IBM, Motorola, Procter & Gamble, and

General Electric have strongintelligence units.


20/28

1. Business scope & objectives;

2. Quality of management -experience, capabilities &weaknesses;

3. Market position & trends;4. Market target(s) and customer base;

5. Marketing program positioning

strategies;6. Key competitive advantages (e.g.

access to resources, patents.)


21/28

Key competitor: organization(s)targeting the same market target (same products or same segmentwithin a market).

Example: Airlines compete on routes -

Emirates, Qatar Airways, PIA.

Companies across industries (in asector) satisfying the same need or

want, also compete: Airlines competeagainst

Train Services & Inter-City luxury

coaches!


22/28

Evaluation considers strengths &

weaknesses of competitor on the basis of:

Scope of

marketcoverage

Distinctivecapabilities

Pastperforman

ceCustomer

valuepropositio

ns


23/28

1. Market coverage: focus on market

segments & relative market share;

2. Past performance: to revealcompetitors strength & track record of

delivery;

3. Customer value proposition: toassess how well competitors meet

customer value requirements;4. Distinctive capabilities: quality & state

ofcompetitiveness.


24/28


25/28

HOW can a competitors future actionbe anticipated?

Based on current strategy?

Current actions only a weak indicatorof future threat.

Is there a solution????


26/28

Swatch, in 1995, met an aggressivecompetitor in Timex but failed torespond.

Timex launched a large selection ofwatches & also obtained licenses forNautica, Joe Boxer & Timberlandbrands.

As sales continued to slide, Swatchended up spending 12 times theirnormal budget to regain market share.


27/28

New competitors come from four majorsources:

1. Related product markets;

2. Companies with related technologies;3. Companies targeting similar

customer groups;

4. Companies with similar products,operating in other geographicalregions.


28/28

Markets do not follow clearly defined& predictable paths;

Organizations need to invest time &effort to analyze the forces of change.

Question: What influences/discontinuities in the market cantotally transform it?

a. Customer trends;b. Environmental changes;c. Economicfactors.

Competitve Space (Marketing)

Documents

Transcript of Competitve Space (Marketing)