competitve space (marketing)
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7/30/2019 Competitve Space (Marketing)
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STRATEGIC MARKETING & PLANNING
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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.
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The TelecomExample!!!
Telecom has allowed a
virtual world to emerge-
one in which time &distance are no longerbarriers to doing
business
orcommunicating.
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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
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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).
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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.
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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.
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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.
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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
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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.
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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.
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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).
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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.?
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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.
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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.
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Different competitive forces are present
in the value-added chain.
Michael Porters FIVE COMPETITIVE
FORCES clearly outline these
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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);
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4. Suppliers bargaining power: rawmaterials, finished goods;
5. Bargaining power of buyers (e.g.Supermarket chains).
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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.
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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.)
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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!
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Evaluation considers strengths &
weaknesses of competitor on the basis of:
Scope of
marketcoverage
Distinctivecapabilities
Pastperforman
ceCustomer
valuepropositio
ns
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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.
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HOW can a competitors future actionbe anticipated?
Based on current strategy?
Current actions only a weak indicatorof future threat.
Is there a solution????
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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.
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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.
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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.
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