MARKETS AND

COMPETITIVE
SPACE

Course Instructor
M Qasim Ali
MARKETS AND COMPETITIVE SPACE
 Markets and Strategies
 Defining and Analyzing Product-Markets
 Describing and Analyzing End-Users
 Analyzing Competition
 Market Size Estimation
 Developing a Strategic Vision about the
Future
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.
Pepsi , Nestle, Nokia
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
New Types of Traditional Business
Competition Competitors Models

New New
Customers Conventional Value Customers
Propositions

Existing Customer
Base

New Customer
Base(s)
 AN ARRAY OF CHALLENGES
Disruptive Innovation
(Amazon.com)

Fast Changing Commoditization

Markets Drivers of Changes Threats (Personal
(Digital in Markets computers)
Cameras)

Creating New Market Space

(Smartphone Cameras)
Disruptive Innovation
 These innovations provide simpler and less costly
ways to match the value requirements offered by
the products (goods and services) of incumbent fi
rms serving the market.
 E.g Amazon
Commoditization Threats

 When modularization (products comprised of

standardized components) occurs products become
commodities, making it difficult to earn anything
more than subsistence returns
 E.g Personal Computers
 IBM sales it PC business to Lenovo.
Creating New Market Space
 These actions require finding and pursuing
opportunities to offer potential buyers value in
markets and segments that are not being served.
The purpose is to target new opportunities where
buyers’ value requirements are not being satisfied
by existing products.
 Smartphone Cameras
Fast Changing Markets
 Increasingly, fewer markets are stable, and instead,
many are changing rapidly. Fast changing markets
require modifications in management’s strategic
thinking. Indications of changes are signalled by
shifting customer value requirements, new
technologies, changes in competitive space, and
new business models.
Markets Impact Strategies

 Market changes often require altering

strategies
 Forces of change create both market

opportunities and threats

 Inherent danger in faulty market sensing
Product-Market
 The term product-market recognizes that a market
exists only when there are buyers with needs who
have the ability to purchase goods and services and
products are available to satisfy the 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.”
DEFINING AND ANALYZING PRODUCT-MARKETS

Determine the Boundaries and

Structure of the Product-Market

Form the
Product-Market

Describe and

Analyze End-
Analyze
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.”*

*Srivastava, et al. (1984) Journal of Marketing, Spring, 32.

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
 Generic Product Market
 E.g Kitchen Appliances
 Product Type and Product Market
 E.g Oven for cooking food
Forming Product-Markets
 The factors that influence how product-market
boundaries should be determined include the
purpose for analyzing the product-market, the rate
of changes in market composition over time, and
the extent of market complexity.
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

for breakfast meal •Generic Product
Class

Cereals •Product Type

Ready to eat •Variant A

Regular
Natural •Variant B
Nutritional Pre-sweetened

Nestle Knorr Shan Foods •Brands

 Identifying and
Describing Buyers

DESCRIBING
Building How
AND Buyers
Customer
Profiles ANALYZING Make
END-USERS Choices

Environmental
Influences
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
AND Key
Potential
MARKET Competitors
Competitors
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
Diet Pepsi
colas Coke Wine
Product from
competition: Lemon
Product category diet colas limes
Juices competition:
soft drinks
Coffee
Generic competition:
beverages
Budget competition:
food & entertainment
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
Defining Industry Structure & Characteristics

SUPPLIERS
Industry Form
Industry PRODUCERS
Environment
Competitive WHOLESALERS/
Forces DISTRIBUTORS
Value
Added
RETAILERS/DEALERS
Chain

CONSUMER/
ORGANIZATIONAL END
USERS
 Competitive Forces

1. Rivalry among existing firms.

2. Threat of new entrants.

3. Threat of substitute products.

4. Bargaining power of suppliers.

5. Bargaining power of buyers.

Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.

 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

Current Competitor Customer

Capabilities Evaluation Satisfaction

Past
Performance