Professional Documents
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PIERCY
8/e
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
3-2
Chapter Three
Markets and
Competitive
Space
MARKETS AND
COMPETITIVE SPACE
Markets and
Strategies
Product-Market Scope
and Structure
Describing and
Analyzing End-Users
Analyzing
Competition
Developing a
Strategic Vision about
the Future
MAR KE TS AND
3-4
COMP ETITIV E
SP―ACE
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
3-5
MARKETS AND
STRATEGIES
Markets and
Strategies are
Interlinked
Forming Value
a Shared Migration
Vision Challenges
3-6
Markets I mpact
Strategi es
market sensing
3-7
Customers shift
purchasing to new
business designs with
enhanced value offering
Beware of disruptive
technologies
Market sensing and
Ma tchin g Needs
wi th Produ ct
Benef its
A product – market matches
people with needs to the
product benefits that satisfy
those needs
INNOVA TION
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.
Source: Adapted from Mitchell, Adrian (2004)”Heart of the Matter,” The Marketer,
June 12, 14.
3-11
Product – Market
Boundaries and
St ructur e
Determining Product-Market
Structure
Illustrative Fast-
Food
Product-Market
Structure
SUPER MICROWAVE
MARKETS OVENS
FAST-FOOD
MARKET
CONVENIENCE TRADITIONAL
STORES RESTAURANTS
3-13
Formi ng Product
– Market s for
Analy si s
Factors influencing
product – market
boundaries:
Purpose of analysis
Changing composition
of markets
Extent of market
complexity
3-14
The Changi ng
Com posi ti on of
Ma rkets
Change due to new
technologies and emerging
competition
Consider existing and
emerging markets
Identify alternative ways to
meet needs
Extend product-market
Ex tent of
Mark et
Compl exit y
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
3-16
Ill us trati ve
Product – Market
Structure
Food and beverages •Generic Product
for breakfast meal
Class
Regular
Natural •Variant B
Pre-sweetened
Nutritional
DEFINI NG AND
ANA LYZING
MARKET
Define S
Product-Market
Boundaries and Structures
Identifying and
Describing Buyers
Building
DESCRIBING How
AND Buyers
Customer
Make
Profiles ANALYZING Choice
END-USERS s
Environmental
Influences
3-19
Information search
Alternative evaluation
Purchase decision
Post-purchase behavior
3-21
Bui lding
Custom er
Prof iles
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.)
3-23
ANALYZING
COMPETITION
1. Define Industry
Structure and
Characteristics
5. Identify 2. Identify
New and
PRODUCT- Describe
Competitors MARKET Key
STRUCTURE Competitors
AND
MARKET
4. Anticipate SEGMENTS
Actions by 3. Evaluate
Competitors Key
Competitors
3-24
Exampl es of
Lev els of
Competi ti on Baseball
cards
Bottle Video
water Games
Fast
Food
Generic competition:
beverages
Budget competition:
food & entertainment
3-25
CONSUMER/
ORGANIZATIONAL
END USERS
3-27
4. Bargaining power of
suppliers.
Extent of
Market Coverage
Past
Performance
3-30
DEVELOPI NG A
ST RA TEGI C VIS ION
ABOUT T HE FUT UR E
Industry Boundaries Blurring
and Evolving
MAR KE T SI ZE
ES TIMATION
Product-Market Forecast
Relationships
(area denotes sales in $’s)
Market Potential
Estimate
Unrealized
Potential
Company Industry
Sales Sales
Forecast Forecast
3-32
Product- Market
For ec ast
Relat ions hips f or
Industri al Pai nti ng
Un its
Sales (in 1000s
of units)
900
800
Market
700 Potentia
l
600 Sales
Forecast
500
400
300
200 Company XYZ
Sales Forecast
100
0
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