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Module 2 Notes

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Ryerson University
MKT 100
Paul Finlayson

Module 2 Section 1: Analyzing Competition • No competition: there is a single supplier of a particular product o Eg. Region electricity. Control the price, quality, and quantity supplied • Monopoly: government regulated • Trend is away from Monopolies, towards oligopolies • Oligopolistic competition: dominated by a few large suppliers • Usually require a very large investment in equipment, technology, and/or distribution o These encourage mergers and acquisitions • Suppliers compete on price, product features, advertising and sales promotion • Eg of oligopolies, laptop computer market • Some oligopolies have fierce price and innovation completion, some don’t • Monopolistic completion: suppliers offering a variety of products, each of which has a small loyal market share • There exists a lot of product and service differences between rivals as well as price completion • Eg, salad dressings, BBQ sauce, beauty salons and bars • Perfect competition: many suppliers sell essentially the same product. • Supply and demand will control the price • Sales and promotion will have little influence • Low cost production of a quality product and efficient distribution will determine success • Eg. Thompson Seedless Grape producers • Competition: Who are our major competitors? Who has what share of sales in a given market? www.notesolution.com • Market Share: measured as a company’s percentage of total industry sales over a specified time period • Market: specified by a realistic assessment of company resources and company growth objectives • Closest and most immediate competition comes from rival’s products that share similar features (eg. Soft drinks) • General completion comes from products that satisfy a core benefit (eg. Thirst quenching or pick-me-up drinks) • Historical prob with research in completion, too much focus on measuring the o number of current competitors o the concentration of market share (The combined market share of the largest four competitors) o the current balance sheet of major competitors • Need more emphasis on o Commercializing and diffusing of new innovation into the market o Which competitors are changing customer preferences and how and why? o Competitive insight, process thinking, why they have success • Sharepoint: percent of market share • You need to have a 360-degree long distance vision in a market to see the threat on the horizon • Must look ahead • Leading indicators of a likely change in future sales, profits, and competitiveness: o Changing brand mind-share: the changing share (%) of customers who name the brand when asked to name the first brand that comes to mind when they think of buying a particular type of product o Changing brand voice-share: The changing share of advertising dollars the brand has of the total dollars spent on advertising in the market. Brand mind-share more important than brand voice-share www.notesolution.com o Changing research and development (R&D): the changing share the company’s R&D expenditure has of the total industry’s R&D expenditure Michael Porter’s Five Forces Model • View suppliers and buyers more positively and reduce down the 3 forces • Suppliers and distributors, not treated as rivals Auditing Current Competitors • Competitive Audit: reports on the current success stories, mistakes, competitive advantages and disadvantages of a competitor • Porter, competitive advantage in product quality and costs can come from one or more of the following stages of the added-value chain of processes: o Supply processes to o Manufacturing operations processes to o Distribution processes to o Marketing and sales processes to o Service processes Section 2: Analyzing Channels • Best practice is to research channels and look at trading relationships found in the Distribution model www.notesolution.com • New Tech is the biggest driver in the channels of distribution • Good example is the music industry • First records were played in stores, sampling of artists • But then chain stores entered and took away business Researching Individual Trade Customers • Start with performance metrics: o Retail margin o Sales divided by average inventory o Dollar contribution per square foot and per employee o Customer repeat purchase intention • The challenge is to understand where the distributor or trader is comparatively weak and/or strong along its added value chain • About the processes and the quality of process Section 3: Market Scanning and Analysis • Manager must turn attention to economic, social, and tech trends • How they change customer preference • Technology given access to new consumers around the world • Large growth in Asian countries • Recession based on Asian people saving their money and not always buying right when they want, lending it to American who spend beyond their means • Asian more competitive, are able to meet needs of consumers, while American more rigid. • America lost competitiveness in traditional manufacturing (auto, and home appliances) and financial services • Keynesian Multiplier Dynamic: boom and bust cycles of economies • Market Evolution Dynamic: explains evolutionary growth of particular markets www.notesolution.com • Example is of the self serve gas stations at convenience stores • Innovation leads to decrease in gas station revenues, which leads to a negative cause and effect for the stocking of convenience store products, which is a negative cause and effect for convenience store revenues. • Virtuous circle vs. Vicious circle. Section 4: Market Law and Regulation • Job of the gov’t to help set the moral tone of the marketplace by establishing the rules and regulations • Affect things such as price, selling, advertising, and distribution • Ex, in African countries, little trade with outside world, cause no laws or courts to uphold the law and trading contracts • No basis in economic theory or practice for the claim that markets work best when they are completely free of regulation • Companies and industries try to get regulations passed and the current law interpreted so as to increase the competitiveness or profitability of their particular firm or industry • See text for list of acts and laws and stuff • Hostile attitude bad Section 5: Marketing Planning • How to prepare a marketing plan o Market Analysis o Strategic plan
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