MKT100 – MOD2
4 different supply environments:
1. No competition / Monopoly
A single supplier who has control over price, quality and supply
Often government regulated
Countries often shift away from monopoly towards oligopolistic
Ex. LCBO, Toronto hydro electric system
2. Oligopolistic competition
A market dominated by a few suppliers that requires a large investments in equipments or
Suppliers compete on price, product features and sales promotion
Animal spirits: the drive that constantly improve ways to satisfy customer and reduce price
Ex. Apple, Microsoft, Esso
3. Monopolistic competition
Many suppliers with a variety of product, each of which has a small, loyal market share.
Ex. Of products: local beauty salon, salad dressing, bbq sauce
Ex. Jackaster’s, pickle barrel
4. Perfection competition
When many suppliers sell essentially the same product
The suppliers will have control of the supply and demand of the price, advertising and sales
promotion with little influence.
Ex. Ontario corn producer, grape producer.
- Market share is measure by the company’s percentage of total industry sales over a specified of time.
o Market share = Company sales in $s divided by total industry $ sales over specified time
period x 100%.
- Determining major competitors define the market; define a market is normally specified of the
company’s resources and company growth objectives.
- Market share can change dramatically depending how defined the company is globally.
- Closest competitors are the ones that share similar features
- Newspaper industry is going downhill from the creation of e-newspapers
- Problems of the competition is we pay attention to number of current competitors, the concentration of the
market share, and current balance sheet of the major competitors
- Emphasis should be on the commercialization and diffusing of new innovation into the market.
- Research efforts better spent finding out which established competitor or new start-up company is using
radical new products or new technology to increase customer’s satisfaction and reduce cost.
o EX. Motorola and Nokia spent too much time on comparing and publicizing their market share
and did not pay enough attention how blackberry made it more convenient to send emails and read business files through their innovative software; by the time they recognized what is a
smartphone, RIM owned the market.
Levels of competition
- Focus on a profitable business development opportunity using a new technology that delivers more in
benefits than the current technology.
- Need to have a crucial indicator of the environment of the competitor.
- The key to competitive research is to focus on and understand: Competitor added-value processes.
- Marketing views suppliers and buyers: Mostly as partners, sometimes as competition.
Likely to change in the future profits, sales, and competitiveness:
Changing brand mind-share
% of customers of what brand comes to mind when asked a particular product
Often foreshadows of change in the market sales share
Changing brand voice-share
% spend on media in total industry spend; Total dollars spend of advertising in the market.
Likely to lead a change in mind-share, but if the message is weak, it may not happen.
**Brand mind-share is much more important than brand voice-share
Changing research and development (R&D) share
% spend on R&D in total industry spend
Important measure when one competitor greatly increases their R&D spending and another greatly
reduces its R&D spending.
A lot depends of creativity of the researchers and supervised managers involved rather than the dollars
Five forces that shape the competition (Porter model)
1. Current competitors
2. The threat of new entrants
3. The threat of new substitutes
4. The bargaining power of distributors
5. The bargaining power of suppliers
Auditing current competitors
Manufacturing operation processes
Marketing and Sales processes
Service processes Analyzing channels
Best to research channels by analyze channels and trading relationship
New technology is the biggest change in the channel of distribution
3 stages of an individual distributor audit
1. Performance metric analysis
2. Fit analysis
3. Added-value chain analysis
Understand the reasons for a channel member’s change in performance and behaviour by tracing back through
the distributor’s added-value chain presented:
inbounded operations bounded
merchandising and operation processes
marketing and sales processes
Delivery and service processes
- It`s all about processes and the quality of the process thinking of the channel and supply partners.
-To understand where the distributor or trader weak or strong along its added-value chain.
Market scanning and analysis
Customer Focus Model details how to study consumer and learn how technological, economic and social
trends are impacting the consumer.
- Technology had given us access to communicate around the world
- North America is the biggest economy in the world, but it`s growth and evolution is driven by outside
economic; very rapid growth in the Asian consumer markets.
2 fundamental Supply-demand supply feedback m