4

Category Attractiveness Analysis

 Aggregate Category Factors
• Category size
• Category growth
• Stage in product life cycle
• Sales cyclicity
• Seasonality
• Profits

4-2
Attractiveness of Market Variables

4-3
 Category Attractiveness
over the Product Life Cycle
Sales

Stage of Introduction Growth Maturity Decline Time

product
life cycle
Category Small Moderate Large Moderate
size
Category Low High Low Negative
growth

Category Low High Low/high Low

attractiveness

4-4
 Category Factors
• Threat of new entrants
• Bargaining power of buyers
• Bargaining power of suppliers
• Current category rivalry
• Pressure from substitutes
• Category capacity

4-5
 Environmental Factors

• Technological
• Political
• Economic
• Regulatory
• Social

4-6
 Factors in Assessing
the Structure of Industries

4-7
 Factors in Assessing
the Structure of Industries

• Threat of new entrants

• Bargaining power of buyers
• Bargaining power of suppliers
• Amount of intracategory rivalry
• Threat of substitute products or services

4-8
Buyer Bargaining Power is High When:
• Product bought is a large percentage of the
buyer’s cost.
• Product bought is undifferentiated.
• Buyers earn low profits.
• Buyer threatens to backward integrate.
• Buyer has full information.
• Substitutes exist for the seller’s product or
service.

4-9
Supplier Bargaining Power is High When:

• Suppliers are highly concentrated, that is,

dominated by a few firms.
• There is no substitute for the product
supplied.
• Supplier has differentiated its product or
built in switching costs.
• Supply is limited.

4-10
Major Characteristic of Categories
Exhibiting Intensive Rivalries

• Many or balanced competitors

• Slow growth
• High fixed costs
• Lack of product differentiation
• Personal rivalries

4-11
Impact of Category Factors
on Attractiveness

4-12
 Typology of Technical Developments

* Includes agronomic and biomedical developments.

4-13
Conceptualizing Political Risks

4-14
Impact of Category Factors
on Attractiveness

4-15
5

Competitor Analysis

4-16
Competitor Analysis System
Secondary data Primary data

Key questions:
- Who are they?
- What are the
competing product
features?
- What do they
want?
- What is their
current strategy?

Differential
competitor
advantage analysis
i.e. Who has the
competitive product
advantage?

What are they going to

do?

4-17
Primary Sources of Competitor Information
Investment
Bankers
Consultants/
Specialized
Sales Force
Firms

Primary
Data
Suppliers
Employees

Customers

4-18
Other Sources of Competitor Information
Help-Wanted
Advertisements
Hiring Key
Employees Trade Shows

Primary
Data
Monitoring Plant Tours
Test Markets

Reverse
Engineering

4-19
Product Features Matrix

4-20
Assessing Competitors’ Strategies
• Marketing strategy
• Comparing value chains
• Marketing mix
• Pricing
• Promotion
• Distribution
• Product/Service capabilities

4-21
 Value Chain

Firm Infrastructure
Support Human Resource Management
Activities Technology Development
Procurement

Inbound Marketin
Operations Outbound
Logistics g and Service
Logistics
Sales

Primary Activities

4-22
Criteria to Assess Technological Strategy

1. Technology selection or specialization

2. Level of competence
3. Sources of capability: internal versus
external
4. R&D investment level
5. Competitive timing: initiate versus respond
6. R&D organization and policies

4-23
Competitor Information to Collect
• Ability to conceive and design
• Ability to produce
• Ability to market
• Ability to finance
• Ability to manage

4-24
Differential Competitor Advantage Analysis

4-25
A Competitive Conjecture Process

First period

Our
total
outcome

Second period
Should we cut price?

4-26
PDA Product Features Matrix

4-27
Comparison of Competitor Resources: PDAs

4-28
Comparison of Competitor Resources: PDAs (cont.)

4-29