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University of Guelph
Hospitality and Tourism Management
HTM 3080
Statia Elliot

Chapter 10 Understanding CompetitionMacrocompetitionis any other organization that competes for the same customers dollarindustry level competitionSeveral changes take place in the competitive environment as an industry reaches the maturity stage of its life cyclecompetition for market share becomes more intense as firms are forced to achieve sales growth at one anothers expensefirms are selling increasingly to experienced repeat buyers who are making choices form known alternativescompetition has become more oriented to value in relation to cost and service as knowledgeable buyers expect similar price and product and service featuresnew products new services and new applications are harder to come bybrand recognition and clarity become more powerful forces in customer selectionfragmented industries begin to consolidate creating bigger and more powerful competitionsubstitute products become more prevalent eg fine dining restaurant operators are threatened by the competition they are getting from supermarketsprepared dinners takeout services catering services and casual dining hotel and motel operators are threatened by the competition they are getting from campers recreational vehicles and the hospitality of friends and relatives the problem with services is that one can often readily substitute for another often at a much lower priceMarketing Threatsthey occur when environmental trends endanger the competitive advantage of a firmMichael porter delineated the competitive threats in the environment into a framework of five forces that shape competition within an industryMicrocompetition competition as any business that competes for the same customers in the same product class at the same point in time an alternative in a different product class can become a competitor if the one product class is not fulfilling customers needs eg we would not normally think that a threestar hotel would be a direct competitor of a fourstar hotel the situation changes however when economic or other market forces change and customers turn to lowerpriced alternatives as a result
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