Textbook Notes (369,054)
Canada (162,364)
Marketing (884)
MKT 100 (488)
Tina West (4)
Chapter

Module #2 Notes.doc

12 Pages
84 Views

Department
Marketing
Course Code
MKT 100
Professor
Tina West

This preview shows pages 1,2 and half of page 3. Sign up to view the full 12 pages of the document.
Description
Module #2 1. Analyzing Competition What is market orientation? o Chance favours the prepared mind and an organization that gathers market intelligence, analyzes it, disseminates it, learns from it and then responds to it is favoured by chance. No competition occurs when there is a single supplier of a particular product, such as a regional electrical utility that has control over price, quality, and quantity supplied. A monopoly is often government regulated and regulators often undertake financial audits and customer satisfaction surveys to check on whether the monopoly is making excessive profits and satisfying customers. Trends revealed in this publicly released information can be used by a potential new entry to argue against the continuation of the monopoly. In many countries there has been a shift away from state supported and regulated monopolies toward state regulated oligopolies because competition, even if only between two suppliers, gives consumers choice, which encourages innovation and price competition. Oligopolistic competition is a market dominated by a few large suppliers such as the detergent or aircraft industry. Oligopolies often evolve in industries that require very large investments in equipment, technology, and/or distribution because such a requirement encourages mergers and acquisitions. The few suppliers compete on price, product features, advertising and sales promotion. Many modern markets evolve into oligopolies with a few successful suppliers dominating the market, for example, the laptop computer market. Some oligopolies exhibit fierce price and innovation competition, others do not. A lot depends on what the famous English economist Lord Keynes called the animal spirits in the market: the drive to constantly improve in ways that satisfy customers and reduce costs. Monopolistic competition has many suppliers offering a variety of products, each of which has a small, loyal market share. Examples are found in salad dressings or barbeque sauces, local beauty salons and bars. The feature of this type of competition is that there exists a lot of product and service differentiation (differences) between rivals as well as price competition. Perfect competition is when many suppliers sell essentially the same product, such as the Thompson Seedless Grape producers. Supply and demand will control the price; advertising and sales promotion will have little influence. Low cost production of a quality product and efficient distribution determine success in such a market. Market share is measured as a companys percentage of total industry sales over a specified time period. Before determining our major competitors - define the market (not easy) The market is normally specified by a realistic assessment of company resources and company growth objectives A companys market share can change dramatically depending on whether the market is defined as global, a particular export region (say the EU), the U.S. market, a region of the United States, a city, a segment of users, or by the product form (e.g. diet colas). Module #2 For example, some of the different types of markets a product competes in are illustrated in Figure 2.1 The closest and most immediate competition comes from rivals products that share similar, specific design features (e.g., diet cola cans) and are targeted at the same consumers. The next level of market competition comes from products that share some similar features (e.g., soft drinks). More general competition comes from products that satisfy a core benefit (e.g., thirst-quenching or pick-me-up drinks). o Both Pepsi and Coke were so focused on each other that they neglected to respond in time to the bottled water, iced tea and Red Bull market threats. The newspaper industry has also focused too narrowly on who its competition was for advertising. The result was that the whole industry was late in creating e-newspapers and of course completely missed the search advertising market opportunity that Google created and has made into a $30 billion dollar industry. o Took away most of the revenue, shares, and consumers from the newspaper industry over to Google advertising industry Problem- too much focus on measuring the number of current competitors, the concentration of market share (the combined market share of the largest four competitors) and the current balance sheet of major competitors. More on commercializing and diffusing of new innovation into the marketModule #2 o competitive insight comes from process thinking that explains such success in the market, not from knowing who has the largest market share. 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. Competitor research efforts are better spent finding out which established competitor or new start-up company is using radical new product or process technology to increase customer satisfaction and reduce costs. The history of the evolution of technology suggests that small start-up companies such as RIM or a large company in a different market often revolutionize a market, so keep a special eye on them. To see the threat you have to see it in the new competitions processes, which means you need to be a good intuitive process thinker and observer. o For example, the traditional process of buying a book involved going to a book store and browsing, rather than browsing a website. o Amazon.com developed a web-based process (a way or method) of browsing books and buying books, and suggesting other books through analyzing purchasing patterns that traditional book retailers not only did not invent but refused to accept until they started to go out of business. Daniel Lamarre the president of Cirque du Soleil, has observed, You dont look around, you look ahead.1 You focus on a profitable business development opportunity using a new technology that delivers more in benefits than the current technology. You have to have more than good vision; you have to be a visionary. You have to be able to see beyond the horizon. While the change in market sales share over time is a crucial indicator of the competitive environment, it is not the only measure of competitiveness. The following are often used as leading indicators of a likely change in future sales, profits, and competitiveness. 1. Changing b
More Less
Unlock Document

Only pages 1,2 and half of page 3 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit