1. Knowing how to define the competition, Using a methodological analysis tool, Knowing how to identify the type of competitive environment, Being familiar with the tools for monitoring the competition The competitive field Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

2. The strategic advantages of having competitors Market development Deterrent effect on the entry of new firms Expansion of the differential advantage by offering the consumer a reference standard; in this way certain competitors can strengthen the company’s competitiveness, if the company is seeking to distinguish itself in other areas (the advent of Free has allowed Orange to emphasise the differentiation in their quality of service) Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

3. Defining the competition means taking into consideration All of the solutions offered to the consumer to meet the same expectation But definitely not…all of the companies in the same economic sector This approach is taken with a view to so-called “intensified rivalry” regarding the focus need (as in the definition of the market) Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

4. For example On a student campus, the competitors for lunch in the local university restaurant may be: The other moderately-priced local restaurants: AS WELL AS: Sandwiches or personally prepared food brought by students to eat on campus Eating at home by students not living very far away A superstore near the campus offering sandwiches and pre- cooked take-away meals = anything that provides lunch for the student Laurence Chérel Catherine Madrid IUT Tech de Co

5. A methodological tool for analysing the competition When looking towards intensified rivalry, it is necessary to take into consideration all of the players with the potential to meet the focus need, Michael Porter has consequently identified 5 forces: Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

6. The forces that build competition, according to M. Porter Rivalry between the firms operating in the sector. Threat of new entrants Threat of substitute products Customer position of strength Supplier position of strength

7. Analysing the competition means Determining whether or not each of these forces represents a significant threat To do so, the factors influencing these forces must be taken into consideration Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

8. What increases rivalry The number of competitors Low rate of market growth Little differentiation between products, thus the importance of price as a key factor for success Existing rivalry in the sector Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

9. For example In the motor fuel market rivalry is high because of a price war between the distributors and little product differentiation in the opinion of consumers Laurence Chérel Catherine Madrid Tech de Co Bordeaux

10. A few question to consider in analysing the strength of the force Who are the present players and how many of them are there? What distinguishes them and their share of the market? How have they changed within recent years ? Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

11. The threat of new entrants What increases the threat of new entrants The attractiveness of the sector Easy access to distribution channels Easy access to raw materials The lack of experience effect in the sector A low degree rivalry in the sector Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

12. For example: In the tablet market, which is now very attractive (up 60% in value in the second quarter of 2013) the threat from new entrants is high, especially the threat from products with Windows 8 http://pro.clubic.com/actualite-e-business/actualite-576628-tablettes-idc-apple-ipad- samsung-surface.html http://www.zone-numerique.com/lipad-perd-du-terrain-avec-396-de-parts-de- marche.html http://pro.clubic.com/actualite-e-business/actualite-576628-tablettes-idc-apple-ipad- samsung-surface.htmlhttp://www.zone-numerique.com/lipad-perd-du-terrain-avec-396-de-parts-de- marche.html In the telephone service providers market, the advent of new players is regulated by the regulatory authority for electronic communications and phone systems) ARCEP; the threat from new entrants is therefore low Laurence Chérel Catherine Madrid Tech de Co Bordeaux

13. A few questions to consider: Is substantial investment required for entry into the market? Who are the potential new players in terms of direct competition? Is it a long-standing establishment for a famous brand? Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

14. The threat of substitute products What is it? What increases the threat from substitute products different technological products that cater to the same need The improvement in the performance/price ratio The speed of technological changes The ease of use of the substitute product (no change in behaviour) Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

15. For example… Mobile phones are substitute products with cameras; they are a serious threat because using them does not require any radical change in consumer behaviour Car-sharing can be a substitute solution to owning one’s own vehicle; in this case there is less of a threat because some consumers may be constrained by their reservations Laurence Chérel Catherine Madrid Tech de Co Bordeaux

16. A few questions to consider: How is the technology evolving? What are the possible substitute products? What will be their differential advantages? Who will be the potential new players in terms of products Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

17. The power to negotiate with customers What is it? What increases The ability of customers to negotiate the selling price and conditions The customers’ power of choice, based on the number of companies able to satisfy their needs The importance of customer purchases to the company’s sales The part price plays in their choice if there is little differentiation between products The ease with which customers can switch to other suppliers Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

18. For example: It is sometimes difficult for customers to change mobile phone operators; this reduces customers’ power to negotiate with these operators, In theory, consumers do not have the power to negotiate price with MacDonald’s; that being said, it is the customers who choose where they will eat, so the power of negotiation is balanced in this case SMEs that sell to distribution chains are subject to fixed conditions for the purchase of their products; customer negotiating power (in this case, the distribution chains) is very high in this case Laurence Chérel, Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

19. How many customers – actual and potential – are there? What do they know about the market? Which players are offering equivalent or substitute products? A few questions to consider : Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

20. The power to negotiate with suppliers What is it? What increases The ability of suppliers to impose their conditions on the company in terms of cost or the type of product The scarcity of suppliers Low purchasing by the company compared with the supplier’s sales turnover The part played by price if there is little differentiation between products The company’s difficulty in changing suppliers Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

21. For example … In the computer-building market, Windows makes its pre-loaded software indispensable; for computer manufacturers, the power to negotiate with their supplier is very limited On contrast, in the dairy industry it is the manufacturers who impose their buying price on the milk producers http://monde- rural.blog.lemonde.fr/2010/08/13/combien-coute-vraiment-un-litre-de-lait / Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

22. A few questions to consider: How many suppliers are there in the market? Do they operate independently or in conjunction? Do you have a choice of suppliers ? Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

23. The type of competitive environment There are three types of competitive environments Identifying the type of competitive environment is useful for a better understanding of the strategies to implement Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

24. Fragmented sectors None of the firms has a large market share and cannot significantly influence the sector, since There are few obstacles to market entry There is no advantage of size when dealing with customers or suppliers The needs of the market are diverse Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

25. 2 possible strategic responses Specialisation Expansion by absorbing the competition Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

26. Fragmented sectors and competitive forces There are few obstacles to market entry, There are no market leaders, These are the factors that can add to the threat of new entrants Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

27. Sectors coming to maturity A slow-down in growth, A replacement market rather than one originally setup Escalation in the fight for market share Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

28. Possible strategic responses Combat marketing Increased differentiation in prices and services The competition goes global Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

29. A maturing sector and competitive forces An escalation in the fight for market share promotes intense rivalry between the companies in the sector As a result the threat of new entrants is likely to be low Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

30. Budding sectors: Two features: technological innovation, the development of new consumer needs Three impacts: the absence of rules in the competitive arena, technological uncertainty difficulty analysing the markets first-time customers >>unfamiliar behaviour Difficulty evaluating the markets Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

31. 3 possible strategies Trend-maker The most high-risk, the highest-performing Trend-tracker More cautious but a focal point of differentiation must be found Trend-spotter Financially cautious but complex in competitive terms Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques

32. Budding sectors and competitive forces The growth rate in this type of sector will be high; the threat of new entrants is likely to be high and the rivalry between the current companies in the sector quite low-key so long as there is only one trend-maker, or even one trend- tracker. Laurence Chérel Catherine Madrid University Institute of Technology, Bordeaux - Marketing Techniques