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Module 2

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MKT 100
Paul Finlayson

MODULE 2 ANALYZING COMPETITION • Market orientation: chance flavours the prepared mind and an organization that gathers market intelligence, analyze it, disseminates it, learns from it and then responds to it is favoured by chance. • Four different supply environments: 1. NO COMPETITON • Single supplier of a particular product that has control over price, quality and quantity supplied • Monopoly is government regulated and undertakes financial audit and customer satisfaction surveys to see if it is making profits and satisfying customers • Shifting away from monopoly and towards oligopolies because competition gives customers choice, which encourages innovation and price competition 2. OLIGOPOLISTIC COMPETITON • Market dominated by few large suppliers • Evolve industries that require very large investments in equipment, technology and/or distribution • Compete on price, product feature, advertising and sales promotion 3. MONOPOLISTIC COMPETITION • Many suppliers offering variety of products, each with small, loyal market share • Product and service differentiation between rivals as well as price competition 4. PERFECT COMPETITION • Many suppliers sell same product • Supply and demand control price; advertising has little influence • Market share measured as percentage of total sales over specified time period • Levels of competition • Product category competition (share specific design features and target same customers) • Core benefit competition (share some similar features) • Budget competition • Emphasis should be on commercializing and diffusing of new innovation into market; measuring number of competitors, market share, and balance sheet of major competitors • Focus on new product or process technology to increase customer satisfaction and reduce cost • Indicators of change in future sales, profits, and competitiveness: 1. CHANGING BRAND MIND-SHARE MODULE 2 • Change share (%) of customers who name the first brand that comes to mind when buying a product • Indicates top-of-mind brand awareness and preferences • Foreshadows change in market sales share 2. CHANGING BRAND VOICE-SHARE • Changing share of advertising dollars brad has of total dollars spent on advertising market 3. CHANGING RESEARCH AND DEVELOPMENT (R&D) • Changing share company R&D expenditure has of total industry R&D expenditure • Direct correlation between R&D spending and successful innovation not always high; depends on creativity • Porter’s five forces that shape competition: 1. Current competitors 2. Threat of new entrants 3. Threat of new substitutes 4. Bargaining power of distributors (B2B customers) 5. Bargaining power of suppliers • In marketing perspective, porter’s model reduced down to three forces o Suppliers and distributors are generally treated not as rivals, but as business partners in an added-value chain with whom you form an alliance to gain collective and individual competitive advantage • Competitive audit reports current success stories, mistakes, competitive advantages and disadvantages of a competitor • Competitive advantage in product quality and costs can come from one or more stages of added-value chain of processes: Manufacturin Distribution Marketing Supply g operations processes and sales Sales processes processes processes process es ANALYZING CHANNELS • New technology is the biggest driver of change in channels of distribution • Three stages individual distributor audit: 1. Performance metric analysis • Retail margin = sales/average inventory • Dollar contribution per square foot and per employee and customer repeat purchase intention 2. Fit analysis • Market fit and product differentiation fit MODULE 2 3. Added-value chain analysis • Understand where distributor or trader is comparatively weak/strong along added-value chain MARKET SCANNING AND ANALYSIS • Growth and evolution being driven by outside economic forces (i.e. Asian markets); managers must track economic trends in emerging nations • Root cause of global recession: economic trend in emerging nations where increasingly prosperous customers in China and other emerging economies preferred to save and invest their new found discretionary income rather than spend it on immediate consumption • EX. North American recession caused by easier access to mortgages causing an increase in real estate and home prices rose; demand exceeded supply • American borrowers started to default and everything went into reverse • China sent savings to be invested into mortgages in United States • EX. China focuses on maintaining growth at 8% or more to encourage educated Chinese from the countryside to urban labour market by encouraging them to save less and spend more on newly available products and services to bolster growth of brand • When sufficiently skilled and confident and with the help of NA and EU marketing consultants, will use new global communication and distribution
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