Professional Documents
Culture Documents
Session 2
Session 2
Space
Chapter 2
New Types of
Competition
Traditional
Competitor
s
New
Business
Model
Conventional Value
Proposition
New
Customers
Existing
Customer Base
New
Customer
Base(s)
New
Customer
Determining Product-Market
Boundaries and Structure
Product-Market Structure
A companys brand competes with other companies brands in
generic, product type, product variant market
The Generic product-market
Includes a broad group of product that satisfy a general yet
similar need
The starting point in determining product-market boundaries is to
identify the particular need or want that is being satisfied
Since people with similar need may not satisfy the need in the
same manner, generic product markets are often heterogeneous,
containing different end-user groups and several type of related
product
Several classes of or types of products can be combined to form
the generic product market for kitchen appliances
Determining Product-Market
Boundaries and Structure
Product-type product market (product class)
Includes all brands of a particular product type
(ovens) for use in food preparation by consumers
The product type is a product category or product
classification that offers a specific set of benefits
intended to satisfy a customer need or want in
specific way
Differences in the product within a product-type
product-market may exist, creating product variants
(product form)
Electric, gas, microwave ovens all provide heating
functions but employ different technologies
Illustrative Fast-Food
Product-Market Structure
SUPER
MARKETS
MICROWAVE
OVENS
FAST-FOOD
MARKET
CONVENIENCE
STORES
TRADITIONAL
RESTAURANTS
Cereals
Generic Product
Class
Product Type
Variant A
Ready to eat
Regular
Natural
Nutritional
Life
Product 19
Pre-sweetened
Special K
Variant B
Brands
Identifying and
Describing Buyers
Building
Customer
Profiles
DESCRIBING
AND
ANALYZING
END-USERS
Environmental
Influences
How
Buyers
Make
Choices
ANALYZING
COMPETITION
1. Define the competitive arena
for generic, specific, and variant
product-markets
5. Identify
New
Competitors
4. Anticipate
Actions by
Competitors
Analyzing
Competition
2. Identify and
Describe Key
Competitors
3. Evaluate
Key
Competitors
ANALYZING COMPETITION
Defining Competitive Arena
Competition often includes more than the firms that direct
competitors( Coke and Pepsi)
The product variant is the most direct type of competitions
Other product categories also compete for buyers
A complete understanding of the competitive arena helps to
guide strategy design and implementation
Since competition often occurs within specific industries, study of
the industry structure is useful in:
The competitive arena
Recognizing that more than one industry may be competing in
the same product-market
Digital photography product-market includes traditional camera
and film competitors and electronic industry competitors
Examples of Levels of
Competition
Baseball
cards
Bottle
water
Fast
Food
Regular
colas
Beer
Fruit
flavored
colas
Juices
Diet
Coke
Video
Games
Diet lemon
limes
Diet-Rite
Cola
Ice
Cream
Diet Pepsi
Product from
competition:
diet colas
Product category
competition:
soft drinks
Generic competition:
beverages
Budget competition:
food & entertainment
Wine
Lemon
limes
Coffee
Industry Analysis
Industry Form
Industry
Environment
Competitive
Forces
PRODUCERS
WHOLESALERS/
DISTRIBUTORS
RETAILERS/DEALERS
CONSUMER/ ORGANIZATIONAL
END USERS
Value
Added
Chain
3-36
HUF MUF
A
A
Neutral
MFA HFA
comment
small
large
Low
High
Ample
Restri
cted
Low
Low
High
High
Low
High
Insignifi
cant
Low
Signifi
cant
high
Exit Barriers
Exit Barriers
Factors
Specialized
Assets
Fixed Cost of
Exit
Strategic
interrelations
hip
Government
Barriers
HA
Comments
Hi
LOW
Hi
Low
Hi
Hi
Low
Low
low
Low, stable
returns
Low, risky
returns
High, stable
returns
High, risky
returns
Entry Barriers
high
low
Exit Barriers
high
Competitive Pressures
Among Rival Sellers
Usually the strongest of the five forces
Key factor in determining strength of
rivalry
How aggressively are rivals using various
weapons of competition to improve their
market positions and performance?
Competitive Rivalry
Factors
HU
FA
Composition of
Competitors
Mkt. Growth rate
Scope of
competition
Fixed storage
Cost
Capacity Increase
Equal
Size
Slow
Global
MU
FA
Neut MFA HF
ral
A
Comment
High
Unequa
l Size
High
Domest
ic
Low
Large
Small
Degree of
differentiation
Comm
odity
High
Strategic Stake
High
Low
Examples
HUF
A
MUFA N
Comment
MFA HFA
Hi
Low
Hi
Low
Low
High
Hi
Low
Power of Supplier
Factors
# of important
Suppliers
Switching cost
Availability of
substitutes
Threat of forward
integration
Importance of
Buyer industry to
suppliers profit
Quantity purchased
by the industry of
suppliers product
Suppliers product
an important input
to the buyers
business
HUF
A
MUFA
N MFA HFA
commen
t
Few
Many
High
Low
low
High
high
Low
small
large
low
High
Highly
Importa
nt
Less
import
ant
Power Of Buyer
Factors
Number of
Important
buyers
Threat of
Backward
integration
Product
supplied
Switching
cost
% of
buyers
cost
Profit
earned by
buyer
Importance
to final
quality of
buyers Pr.
HUFA MUFA
MFA
HFA
Comment
Few
Many
High
Low
Commodit
y
Specialty
low
High
high
Low
Low
High
High
low
Strategic Implications of
the Five Competitive Forces
Competitive environment is ideal from
a profit-making standpoint when
Rivalry is moderate
Entry barriers are high
and no firm is likely to enter
Good substitutes
do not exist
Suppliers and customers are
in a weak bargaining position
Extent of
Market Coverage
Current
Capabilities
Competitor
Evaluation
Past
Performance
Customer
Satisfaction
Market Potential
Estimate
Unrealized
Potential
Company
Sales
Forecast
Industry
Sales
Forecast
Market Share
DEVELOPING A STRATEGIC
VISION ABOUT THE FUTURE
Industry Boundaries Blurring and
Evolving
Competitive Structure and Players
Changing
Value Migration Paths
Product Versus Business Design
Competition
Firms are Collaborating to Influence
Source: C. K. Prahalad, Journal of Marketing, Aug. 1995, vi.