Strategic Marketing

Chapter-2

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Chapter-2

Markets and
Competitive
Space
MARKETS AND STRATEGIES

The Challenges ―
Markets are increasingly complex, turbulent, and interrelated.
Importance of a broad view of the market.
Essential to develop a vision about how the market is likely to change in the future.

Continuous Monitoring is Necessary to:

Find promising opportunities
Identify shifts in value requirements
Understand competitors’ positioning
Guide targeting and positioning
decisions
 OPPORTUNITIES OUTSIDE THE COMPETITIVE
BOX

The Competitive Box

New Types of Traditional Competitors New Business

Competition Models

New Customers New Customers

Conventional Value Propositions

Existing Customer
Base

New Customer
Base(s)
 Markets Impact Strategies

▪ Market changes often require altering strategies

▪ Forces of change create both market opportunities and
threats
▪ Inherent danger in faulty market sensing
 DEFINING AND ANALYZING PRODUCT-
MARKETS
Determine the Boundaries and Structure of
the Product-Market

Form the
Product-Market

Describe and

AnalyzeAnalyze
End-Users
Competition
Forecast
Market Size and
Rate of Change
 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.”*
 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.
Product – Market Boundaries and Structure

▪ Determining Product-Market Structure

1. Start with the generic need satisfied by the product category of interest to
management
2. Identify the product categories (types) that can satisfy the generic need
3. Form the specific product – markets within the generic product – market
Illustrative Fast-Food
Product-Market Structure

SUPER MICROWAVE
MARKETS OVENS
FAST-FOOD MARKET

CONVENIENCE TRADITIONAL
STORES RESTAURANTS
 Extent of Market Complexity
▪ Three characteristics of markets:

1. Functions or uses of the product

2. The enabling technology of the product

3. Customer segments in the product-market

 Illustrative Product – Market Structure

Food and beverages •Generic Product

for breakfast meal Class

Cereals •Product Type

Ready to eat •Variant A

Regular
Natural •Variant B
Nutritional Pre-sweetened

Life Product 19 Special K •Brands

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
 How Buyers Make Choices

 BUYING DECISION PROCESS:

1. Problem recognition

2. Information search

3. Alternative evaluation

4. Purchase decision

5. Post-purchase behavior
 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
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.)
 ANALYZING COMPETITION
1. Define the Competitive
Arena for the Generic,
Specific, and Variant
Product Markets

PRODUCT- 2. Identify
4. Identify MARKET
and and
STRUCTURE Describe
Evaluate Potential
AND Key Competitors
Competitors
MARKET
SEGMENTS

3. Evaluate
Key Competitors
Examples of Levels of Competition
Baseball
cards

Bottle Video
Fast water Games
Food
Regular
colas Diet lemon Ice
Beer limes Cream
Diet-Rite
Cola
Fruit
flavored Diet Coke
Diet Pepsi
colas Wine
Product from
competition: Lemon
Product category diet colas limes
Juices competition:
soft drinks
Coffee
Generic competition:
beverages
Budget competition:
food & entertainment
 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)
 Extent of
Market Coverage

Competitor
Current Customer
Capabilities Evaluation Satisfaction

Past
Performance
 MARKET SIZE ESTIMATION

Product-Market Forecast Relationships Market Potential

Estimate
(area denotes sales in $’s)

Unrealized
Potential

Company Industry
Sales Sales
Forecast Forecast
 Product-Market Forecast Relationships for Industrial
Painting Units

Sales (in 1000s

of units)
900
800
Market
700 Potential
600 Sales Forecast

500
400
300
200 Company XYZ
Sales Forecast
100
0
2003 2004 2005 2006 2007 2008 2009 2010
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 Industry Standards