Chapter 2 Markets and Competitive Space MARKETS AND

Chapter 2 Markets and Competitive Space

MARKETS AND STRATEGIES The Challenges ― Markets are increasingly complex, turbulent, and interrelated. Importance of a broad view of the market. Essential to develop a vision about how the market is likely to change in the future. Continuous Monitoring is Necessary to: Find promising opportunities Identify shifts in value requirements Understand competitors’ positioning Guide targeting and positioning decisions

OPPORTUNITIES OUTSIDE THE COMPETITIVE BOX The Competitive Box New Types of Competition New Customers Traditional Competitors Conventional Value Propositions Existing Customer Base New Customer Base(s) New Business Models New Customers

Markets Impact Strategies • Market changes often require altering strategies • Forces of change create both market opportunities and threats • Inherent danger in faulty market sensing

DEFINING AND ANALYZING PRODUCTMARKETS Determine the Boundaries and Structure of the Product-Market Form the Product-Market Describe and Analyze End-Users Analyze Competition Forecast Market Size and Rate of Change

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. ”*

Product – Market Boundaries and Structure • Determining Product-Market Boundaries and Structure 1. Start with the generic need satisfied by the product category of interest to management 2. Identify the product categories (types) that can satisfy the generic need 3. Form the specific product – markets within the generic product – market

Illustrative Fast-Food Product-Market Structure SUPER MARKETS MICROWAVE OVENS FAST-FOOD MARKET CONVENIENCE STORES TRADITIONAL RESTAURANTS

Extent of Market Complexity • Three characteristics of markets: – 1. Functions or uses of the product – 2. The enabling technology of the product – 3. Customer segments in the productmarket

Illustrative Product – Market Structure • Generic Product Class Food and beverages for breakfast meal • Product Type Cereals • Variant A Ready to eat Regular Natural Nutritional Life Product 19 Pre-sweetened Special K • Variant B • Brands

Identifying and Describing Buyers 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 § BUYING DECISION PROCESS: 1. Problem recognition 2. Information search 3. Alternative evaluation 4. Purchase decision 5. Post-purchase behavior

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 • Start with generic product – market • Move next to product- type and variant profiles >> increasingly more specific • Customer profiles guide decision making (e. g. targeting, positioning, market segmentation etc. )

ANALYZING COMPETITION 1. Define the Competitive Arena for the Generic, Specific, and Variant Product Markets 4. Identify and Evaluate Potential Competitors PRODUCTMARKET STRUCTURE AND MARKET SEGMENTS 3. Evaluate Key Competitors 2. Identify and Describe Key Competitors

Examples of Levels of Competition Baseball cards Bottle water Fast Food Regular colas Beer Fruit flavored colas Diet Coke Diet lemon limes Diet-Rite Cola Ice Cream Diet Pepsi Product from competition: Product category diet colas Juices competition: soft drinks Budget competition: food & entertainment Video Games Wine Lemon limes Generic competition: beverages Coffee

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)

DEVELOPING A STRATEGIC VISION ABOUT THE FUTURE § Industry Boundaries Blurring and Evolving § Competitive Structure and Players Changing § Value Migration Paths § Product Versus Business Design Competition § Firms are Collaborating to Influence Industry Standards