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Chapter

Module 2 Notes

10 Pages
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Department
Marketing
Course Code
MKT 100
Professor
Paul Finlayson

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Module 2
Section 1: Analyzing Competition
No competition: there is a single supplier of a particular product
oEg. 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
oThese 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 dont
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 rivals 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
onumber of current competitors
othe concentration of market share (The combined market share of the largest
four competitors)
othe current balance sheet of major competitors
Need more emphasis on
oCommercializing and diffusing of new innovation into the market
oWhich competitors are changing customer preferences and how and why?
oCompetitive 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:
oChanging 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
oChanging 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
oChanging research and development (R&D): the changing share the
company’s R&D expenditure has of the total industrys R&D expenditure
Michael Porters 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:
oSupply processes to
oManufacturing operations processes to
oDistribution processes to
oMarketing and sales processes to
oService processes
Section 2: Analyzing Channels
Best practice is to research channels and look at trading relationships found in the
Distribution model
www.notesolution.com

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Description
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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