MKT 100 Lecture Notes - Convenience Store, Performance Metric
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24 Apr 2012
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MODULE 2
SECTION 1 – ANALYZING COMPETITION
•no competition single supplier that has control over price, quantity and
quality of product
•oligopolistic competition few large suppliers . ie. Detergent, air craft
people
evolve in industries that need huge investments
suppliers compet on price, product features, advertising and special
promotions
•monopolositic competition many suppliers with variety of products and
each with a small market loyal share
lot of products and service differentiation
•perfect competition all suppliers sell same products
supply and demand control price
define competition by asking: “who are our major competitors?”
who has what share of sales in given market
define the market
•Market share is measured as a company’s percentage of total industry sales
over a specified time period.
•A company’s market share can change dramatically depending on how the
market is defined.
•In practice, the market is normally specified by a realistic assessment of
company resources and by company growth objectives.
•Competitor-research efforts seldom require defining market share down to
the last share point (a share point is 1 percent of market share) because
defining the exact bounds of the market is rarely that precise.
Other indicators of change in future sales, profits, and competitiveness:
Brand Mind share:
•The share (%) of customers who name the brand when asked to name the
first brand that comes to mind when they think about buying a particular type
of product. ie. Shampoo? Dove
•indicates the consumer’s top-of-mind brand awareness and preferences
Brand Voice share:
•The share of media space or time the brand has of the total media share for
that industry, often measured simply as dollars spent on advertising.
•Might change brand mind share
Research and development: (R & D) share:
•A company’s R&D expenditure as a percentage of the total industry’s R&D
expenditure. This is a long term indicator of new product innovation and thus
market share.
•It is good to study the history or last five years of marketing tactics
•The history of the product market is often carried around in the minds of
experienced executives, so the invaluable insights they can provide are lost
when they retire.
Porter described five forces that shape competition
1. existing competition
2. threat of new entrants
3. threat of new substitutes
4. bargaining power of distributers
5. bargaining power of suppliers
•distributers and suppliers should be treated as business partners not threats
unless they are threatening to be new enterants or supply new substitutes