Markets and Competitive Space

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Markets and Competitive Space
Chapter Three
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Drivers of Change

• Deregulation
• Excess global capacity
• Global competition
• Mergers Acquisitions
• New Technology

• Changing customer expectations
• Disintermediation
• Demographics shifts
• Changing life work styles

3
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

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Product-Market Structure
FAST-FOOD MARKET
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Three characteristics of markets

• 1. Functions or uses of the product
• 2. The enabling technology of the product
• 3. Customer segments in the product-market

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Illustrative Product Market Structure

• Generic Product Class

Food and beverages for breakfast meal

• Product Type

Cereals

• Variant A

Ready to eat
Regular
Natural

• Variant B

Pre-sweetened

Nutritional

• Brands

Life
Special K
Product 19
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Identifying and Describing Buyers
DESCRIBING AND ANALYZING END-USERS
How Buyers Make Choices
Building Customer Profiles
Environmental Influences
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Building Customer Profiles

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

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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
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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

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FORCES THAT DETERMINE INDUSTRY COMPETITIVNESS
Threat of new entrants
Bargaining strengths Of buyers
Bargaining strengths Of suppliers
Rivalry among existing firms in industry
Threats of substitute products
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Describing and Evaluating the Competitor
Extent of Market Coverage
Competitor Evaluation
Current Capabilities
Customer Satisfaction
Past Performance
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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

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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

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MARKET SIZE ESTIMATION
Product-Market Forecast Relationships (area
denotes sales in s)
Market Potential Estimate
Unrealized Sales Potential
Industry Market Forecast
Company Sales Forecast
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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