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Chapter Four: Market/Submarket Analysis
Chapter Four: Market/Submarket Analysis
Chapter Four: Market/Submarket Analysis
Market/Submarket Analysis
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Market Size
Market Growth
Market Profitability
Distribution System
Chapter 4 - Market and Submarket Analysis
Cost Structure
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Figure 4.1
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These factors can dramatically change the size and prospects of the existing market Ghost Potential possibility of existing
potential but can not be exploited due to external reasons. Small market size can be good Chapter 4 - Market and Submarket Analysis PPT 4-4
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Market Growth
Estimated market size in future Percentage increase in sales and profits even without increasing market share. Market growth will correspond with product lifecycle Growth pattern and the Driving Forces
Driving Forces and Growth Factor analysis Forecasting growth
Demographic Trends Sales of related equipment
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Industry Profitability
Source: Adapted from Michael E. Porter, Industry Structure and Competitive Strategy: Keys to Profitability Financial Analysis Journal,July-August 1980,p.33.
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Cost Structure
Cost structure analysis will provide into the key success factors Examination of the Value Chain to explore where Cost advantages can be created
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Distribution Systems
What are the alternative distribution channels? What trends are observed in terms of growing importance and channel emergence? Who has the power in the channel, what are the trends of shifting power?
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Competitive Risk Overcrowding Superior competitive entry Market Changes Changing KSFs
New technology
Disappointing growth Price instability
Chapter 4 - Market and Submarket Analysis
Figure 4.5
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Key Learnings
The emergence of submarkets can signal a relevance problem. Market analysis should assess the attractiveness of a market, as well as its structure and dynamics.
Market profitability will depend on five factors existing competitors, supplier power, customer power, substitute products, and potential entrants.
Cost structure can be analyzed by looking at the value added at each production stage.
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Key Learnings
Distribution channels and trends will often affect who wins. Market trends will affect both the profitability of strategies and key success factors.
Key success factors are the skills and competencies needed to compete in a market.
Growth market challenges involve the threat of competitors, market changes, and firm limitations.
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Ancillary Slides
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As the economy, led by the automobile industry, rose to a new high level in the twenties, a complex of new elements came into existence to transform the market: installment selling, the used-car trade-in, the closed body, and the annual model. (I would add improved roads if I were to take into account the environment of the automobile.) - Alfred P. Sloan, Jr., General Motors
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The quality of decision is like the welltimed swoop of a falcon that enables it to strike and destroy its victim. - Sun Tzu
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Most of the most important experiences that truly educate cannot be arranged ahead of time with any precision.
- Harold Taylor
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