1. Topic : 2 Markets and Competitive Space
Dr. Ehsanul Huda Chowdhury

2. Markets Impact Strategies
Market changes often require altering strategies
Forces of change create both market opportunities and threats
Inherent danger in faulty market sensing

3. Value Migrations
Customers shift purchasing to new business designs with enhanced value offering
Beware of disruptive technologies
Market sensing and organizational learning are essential

4. PRODUCT-MARKET SCOPE AND STRUCTURE
Matching Needs with Product Benefits
Product-Market Boundaries and Structure
Forming Product-Markets for Analysis
The Changing Composition of Markets

5. Matching Needs with Product Benefits
A product – market matches people with needs to the product benefits that satisfy those needs
“A product – market is the set of products judged to be substitutes within those usage situations in which similar patterns of benefits are sought by groups of customers.”*
*Srivastava, et al. (1984) Journal of Marketing, Spring, 32.

6. INNOVATION FEATURE Progressive Insurance:
Customer Needs at the Center of Strategy
In the period 1994 to 2004, Progressive Insurance increased sales from $1.3 billion to $9.5 billion, and ranks high in the Business Week Top 50 U.S. companies for shareholder value creation.
The company invents new ways of providing services to save customers time, money and irritation, while often lowering costs at the same time.
Loss adjusters are sent to the road accidents rather than working at head office, and they have the power to write checks on the spot.
Progressive reduced the time needed to see a damaged automobile from seven days to nine hours.
Policy holders’ cars are repaired quicker, and the focus on this central customer need has won much automobile insurance business for Progressive.
These initiatives also enable Progressive to reduce its own costs – the cost of storing a damaged automobile for a day is $28, about the same as the profit from a six-month policy.
Source: Adapted from Mitchell, Adrian (2004)”Heart of the Matter,” The Marketer, June 12, 14.

7. DEFINING AND ANALYZING MARKETS
Define Product-Market Boundaries and Structures
Identify and Describe End-Users
Analyze Industry and Value Added Chain
Evaluate Key Competitors
Forecast Market Size
and Growth Trends

8. Product – Market Boundaries and Structure
Determining Product-Market Structure
Start with the generic need satisfied by the product category of interest to management
Identify the product categories (types) that can satisfy the generic need
Form the specific product – markets within the generic product – market

9. Illustrative Fast-Food Product-Market Structure
SUPER
MARKETS
MICROWAVE
OVENS
CONVENIENCE
STORES
TRADITIONAL
RESTAURANTS
FAST-FOOD MARKET

10. Illustrative Product – Market Structure
Food and beverages
for breakfast meal
Generic Product Class
Cereals
Product Type
Ready to eat
Variant A
Regular
Natural
Variant B
Pre-sweetened
Nutritional
Life
Product 19
Special K
Brands

11. DESCRIBING AND ANALYZING END-USERS
Identifying and
Describing Buyers
DESCRIBING
AND
ANALYZING
END-USERS
How
Buyers
Make
Choices
Building
Customer
Profiles
Environmental
Influences

12. Identifying and Describing End-Users
Illustrative buyer characteristics in consumer markets:
Family size, age, income, geographical location, sex, and occupation
Illustrative factors in organizational markets:
Type of industry
Company size
Location
Type of products

13. How Buyers Make Choices
BUYING DECISION PROCESS:
Problem recognition
Information search
Alternative evaluation
Purchase decision
Post-purchase behavior

14. Environmental Influences
External factors influencing buyers’ needs and wants:
Government, social change, economic shifts, technology etc.
These factors are often non-controllable but can have a major impact on purchasing decisions

15. Building Customer Profiles
Start with generic product – market
Move next to product- type and variant profiles >> increasingly more specific
Customer profiles guide decision making (e.g. targeting, positioning, market segmentation etc.)

16. ANALYZING COMPETITION
1. Define Industry Structure and Characteristics
2. Identify and Describe Key Competitors
5. Identify
New
Competitors
PRODUCT-
MARKET
STRUCTURE
AND
SEGMENTS
4. Anticipate
Actions by
Competitors
3. Evaluate
Key
Competitors

17. Industry Analysis Industry size, growth, and composition
Typical marketing practices
Industry changes that are anticipated (e.g. consolidation trends)
Industry strengths and weaknesses
Strategic alliances among competitors

18. Defining Industry Structure & Characteristics
SUPPLIERS
Industry Form
Industry
Environment
Competitive
Forces
PRODUCERS
WHOLESALERS/ DISTRIBUTORS
Value
Added
Chain
RETAILERS/DEALERS
CONSUMER/ ORGANIZATIONAL END USERS

19. Competitive Forces Rivalry among existing firms.
Threat of new entrants.
Threat of substitute products.
Bargaining power of suppliers.
Bargaining power of buyers.
Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.

20. Key Competitor Analysis
Business scope and objectives
Management experience, capabilities, and weaknesses
Market position and trends
Market target(s) and customer base
Marketing program positioning strategy
Financial, technical, and operating capabilities
Key competitive advantages (e.g., access to resources, patents)

21. Competitor Evaluation
Extent of
Market Coverage
Competitor
Evaluation
Current
Capabilities
Customer
Satisfaction
Past
Performance

22. MARKET SIZE ESTIMATION
Product-Market Forecast Relationships (area denotes sales in $’s)
Market Potential
Estimate
Unrealized
Potential
Company
Sales
Forecast
Industry
Sales
Forecast

23. END