ASSINGNMENT 2

Submitted by:Abhishek rana

CIB00002TB

PORTERS FIVE FORCES MODEL OF COMPETITION

The nature of competition in the industry in large part determines the content of
strategy, especially business level strategy .based it is on the fundamental economics of
the industry, the very profit potential of an industry is determine by competition
interaction. Where these interactions are intense, profit tends to be whittled away by the
activities of competing.

Porters model is based on the insight that a corporate strategy should meet the
opportunities and threats in the organizations external environment. Especially,
competitive strategy should base on and understanding of industry structures and the
way they change. Porter has identified five competitive forces that shape every industry
and every market. These forces determine the intensity of competition and hence the
profitability and attractiveness of an industry. The objective of corporate strategy should
be to modify these competitive forces in a way that improves the position of the
organization. Porters model supports analysis of the driving forces in an industry.
Based on the information derived from the Five Forces Analysis, management can
decide how to influence or to exploit particular characteristics of their industry.

1. Supplier power. An assessment of how easy it is for suppliers to drive up prices.

This is driven by the: number of suppliers of each essential input; uniqueness of their
product or service; relative size and strength of the supplier; and cost of switching from
one supplier to another. E.g warm welcome and quick service by the staff.
2. Buyer power. An assessment of how easy it is for buyers to drive prices down. This
is driven by the: number of buyers in the market; importance of each individual buyer to
the organisation; and cost to the buyer of switching from one supplier to another. If a
business has just a few powerful buyers, they are often able to dictate terms.E.g
discount offered by restaurant to their loyal customers.
3. Competitive rivalry. The main driver is the number and capability of competitors in
the market. Many competitors, offering undifferentiated products and services, will
reduce market attractiveness.E.g Sangeet indian restaurant and Indque indian cuisine.
4. Threat of substitution. Where close substitute products exist in a market, it
increases the likelihood of customers switching to alternatives in response to price
increases. This reduces both the power of suppliers and the attractiveness of the
market. Like threat of choosing other indian restaurents offering the same menu at
almost same price.
5. Threat of new entry. Profitable markets attract new entrants, which erodes
profitability. Unless incumbents have strong and durable barriers to entry, for example,
patents, economies of scale, capital requirements or government policies, then
profitability will decline to a competitive rate.

One marketing strategy that is used by the business giving detailed

explanation/justification:

Market penetration
Market development

Definition
It is a measure of brand or category popularity. It is defined as the number of people
who buy a specific brand or a category of services at least once in a given period,
divided by the size of the relevant market population. Market penetration is one of the
four growth strategies of the Product-Market Growth Matrix. Market penetration occurs
when a company penetrates a market in which current or similar products already exist.
The best way to achieve this is by gaining competitors' customers. Other ways include
attracting non-users of your product or convincing current clients to use more of your
product/service (by advertising, etc.).

Product development (existing markets, new products): McDonalds is always

within the fast-food industry, but frequently markets new burgers.

Market development (new markets, existing products): Target customer, your

competition, brand-building techniques and advertising opportunities.

Diversification (new markets, new products): Salad dressings, marinades, or

sauces.

Market Development:
Market development is a growth strategy that identifies and develops new market
segments for current products
A market development strategy targets non-buying customers in currently
targeted segments. It also targets new customers in new segments.
Market development strategy entails expanding the potential market through new users
or new uses. New users can be defined as: new geographic segments, new
demographic segments, new institutional segments or new psychographic segments.
Another way is to expand sales through new uses for the product.
A marketing manager has to think about the following questions before implementing a
market development strategy: Is it profitable? Will it require the introduction of new or
modified products? Is the customer and channel well enough researched and
understood?
The marketing manager uses these four groups to give more focus to the market
segment decision: existing customers, competitor customers, non-buying in current
segments, new segments.

Before you begin

Your competitive positioning strategy is the foundation of your entire business its the
first thing you should pin down if youre launching a new company or product. Its also
important when youre expanding or looking for a new edge.

Profile your market

Document the size of your market, and identify your major competitors and how
theyre positioned.

Determine whether your market is in the introductory, growth, mature, or

declining stage of its life. This lifecycle stage affects your entire marketing strategy.

Segment your market

Understand the problems that your market faces. Talk with prospects and
customers, or conduct research if you have the time, budget and opportunity.
Uncover their true wants and needs youll learn a great deal about what you can
deliver to solve their problems and beat your competitors.

Group your prospects into segments or personas that have similar problems
and can use your offering in similar ways. By grouping prospects into segments or
personas, you can efficiently market to each group.

Define how you deliver value

At the highest level, there are three core types of value that a company can
deliver: operational efficiency (the lowest price), product leadership (the best
product), or customer intimacy (the best solution & service). Determine which one
youre best equipped to deliver; your decision is your method for delivering value.
Evaluate your competition

List your competitors. Include any that can solve your customers problems, even
if the competitors solutions are much different from yours theyre still your
competition.

Rate yourself and your direct competitors based on operational efficiency (price),
product leadership and customer intimacy. Its easy to think youre the best, so be as
impartial as you can be.

Stake a position

Identify areas where your competition is vulnerable.

Determine whether you can focus on those vulnerable areas theyre major
opportunities.
Make a decision on how to position your offering or company.

Select the mindshare you want to own, and record your strategy

Review the components of your market and evaluate what you want to be known
for in the future. Condense all your research and analysis into the one thing that
you want to be known for, and design your long-term strategy to achieve it.
After Competitive Positioning; you have a competitive positioning strategy, develop
a brand strategy to help you communicate your positioning and solidify your value every
time you touch your market. Together, these two strategies are the essential building
blocks for your business.

"Perception" is defined as the "process by which individuals select, organize, and

interpret the input from their senses to give meaning and order to the world around
them. Components of perception include the perceiver, target of perception, and the
situation. Factors that influence the perceiver:

Schema: organization and interpretation of information based on past

experiences and knowledge

Motivational state: needs, values, and desires of a perceiver at the time of

perception

Mood: emotions of the perceiver at the time of perception Factors that influence
the target:

Ambiguity: a lack of clarity. If ambiguity increases, the perceiver may find it

harder to form an accurate perception

Social status: a person's real or perceived position in society or in an

organization

Impression management: an attempt to control the perceptions or impressions of

others. Targets are likely to use impression management tactics when interacting
with perceivers who have power over them. Several impression management tactics
include behavioral matching between the target of perception and the perceiver,
self-promotion (presenting one's self in a positive light), conforming to situational
norms, appreciating others, or being consistent.