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Market potential is the entire size of the market for a product at a specific time. It
represents the upper limits of the market for a product. Market potential is usually measured
either by sales value or sales volume.
Analysis of Market Potential
Determining the market potential of a product is part of a successful marketing process and
requires marketing research. You'll need to examine at least three factors that will determine
whether the market potential of your product is worth the investment. You need to analyze
your potential customer base, your competition, and the current environmental conditions that
may affect market potential.
Analyzing Potential Customer Base
To determine the size and demographic characteristics of the potential consumers, important
information to obtain includes the population size of the target market, their product
preferences, and their median annual turnover. This will tell the number of potential customers.
We can assess the product's potential customer base by analyzing secondary data, or data that
already exists, Primary data, or data collected specifically to analyze the market potential of a
product. Typical means of collecting primary data include surveys using a random sample of
that we believe match our target market.
Analyzing Competition
It is important to assess the number of our competitors, their respective share of the current
market, and how our product can be differentiated from them. This research can be undertaken
using both primary and secondary research. Secondary data sources may include industry
surveys, membership directories of industry organizations, data collected by locally. Primary
data can be collected by examining our competition from the perspective of not only a
competitor but as a consumer.
Analyzing Current Environment
Remember that market potential is not a static concept - it changes with the general economic
and political environment.

Market Share:
The percentage of an industry or market's total sales that is earned by a particular company over
a specified time period . Market share is calculated by taking the company's sales over the period
and dividing it by the total sales of the industry over the same period. This metric is used to give
a general idea of the size of a company to its market and its competitors.
Market share is a key indicator of market competitiveness that is, how well a firm is doing
against its competitors. It enables managers to judge not only total market growth or decline but
also trends in customers' selections among competitors. Research has also shown that market
share is a desired asset among competing firms.
1. Unit market share: Unit market share measures the percentage of units sold by a company
compared to total units sold in the market.
Unit market share (%) = 100 * Unit sales (#) / Total Market Unit Sales (#)
Unit sales (#) = Unit market share (%) * Total Market Unit Sales (#) / 100
Total Market Unit Sales (#) = 100 * Unit sales (#) / Unit market share (%)
2. Revenue market share: Revenue market share differs from unit market share in that it
reflects the prices at which goods are sold. In fact, a relatively simple way to calculate
relative price is to divide revenue market share by unit market share.
Revenue market share (%) = 100 * Sales Revenue () / Total Market Sales
Revenue ()

Market Analytics:
Marketing analytics comprises the processes and technologies that enable marketers to evaluate
the success of their marketing initiatives by measuring performance using important business
metrics, such as ROI, marketing attribution and overall marketing effectiveness. In other words,
it tells you how your marketing programs are really performing.
Following are the dimensions of a market analysis:
Market size (current and future)
Market trends
Market growth rate
Market profitability
Industry cost structure
Distribution channels
Key success factors
Key success Details
The goal of a market analysis is to determine the attractiveness of a market, both now and in the
future. Organizations evaluate the future attractiveness of a market by gaining an understanding
of evolving opportunities and threats as they relate to that organization's own strengths and
Competitive Analysis:
Competitive analysis is an assessment of the strengths and weaknesses of current and
potential competitors. This analysis provides both an offensive and defensive strategic context to
identify opportunities and threats. Profiling coalesces all of the relevant sources of competitor
analysis into one framework in the support of efficient and effective strategy formulation,
implementation, monitoring and adjustment.
A competitive analysis is a critical part of your company marketing plan. With this evaluation,
you can establish what makes your product or service unique--and therefore what attributes you
play up in order to attract your target market.

Michael Porter (1985), opines that competitive advantage means creating unique capabilities
and strengths, which can be defended against imitations from rival firms
Michael Porter was the first writer to introduce the term competitive advantage to the vocabulary
of the strategy discipline. Initially, the words become confusing for academics, business
executives and consultants (ABCs) (Markides, 2000) because they have their own message
accepted and embraced by the ABC community. Barney (2002 p. 9) makes a useful connection
when he says: a firm experiences competitive advantages when its actions in an industry or
market create economic value and when competing firms are engaging in similar actions.
Barney (1991) argues competitive advantage is achieved when a firm is implementing a value
creating strategy that is not being simultaneously implemented by any current or potential
competitors. A sustained competitive advantage occurs where the firm is implementing a value
creating strategy not being implemented simultaneously by rivals and other firms are unable to
duplicate the benefits of this strategy. It is of interest that Barney (1991) does not comment on
the possibility of competitive advantage being eroded by the innovation efforts of rival firms
changing the market space (Tushman and OReilly, 2004; Kim and Mauborgne, 2005).

Similar to views expressed by Newbert (2008), in this paper competitive advantage is not
organization performance. This position is a matter of some contention in the literature with
writers such as Porter (1985), using the terms interchangeably but Powell (2001) making a
distinction between the two constructs. The concept of competitive advantage relates to a firm
maintaining a sustainable edge over rivals in a particular industry setting that cannot be eroded
over time. The firm with competitive advantage pursues a strategy that is not being executed by a
rival firm or firms. The strategy implemented by the firm with competitive advantage provides
the opportunity for a reduction in costs (i.e. low cost) in the provision of a product and/or service
with some proximity on product and/or service attributes to providers of the alternative
differentiation strategy in a broad market segment. Alternately, the firm may have the ability to
exploit market opportunities with a product and/or service with superior attributes (i.e.
differentiation) with some proximity to low cost providers on cost of production or provision of
service in a broad market segment. The achievement of competitive advantage by a firm in an
industry is also aided by the firm being able to neutralize threats from rival firms in the
marketplace (Barney, 1991; Newbert, 2008), and establishing and maintaining a clear generic
position plays an important role in this desirable set of circumstances (Porter, 1985).

In the strategy literature the organization performance construct is usually associated with the
achievement of strategic (e.g. sales growth, market share, percentage of sales from new products,
customer satisfaction, quality) and financial objectives (e.g. return on assets, return on equity,
return on sales) (Powell and Dent-Micallef, 1997). According to Kaplan and Norton (1992,
1996) which referring to Corporate Scorecard case study pointed out there are several
dimensions to firm performance beyond only the financial perspective including the internal
perspective, the customer perspective and the innovation and learning perspective. They see a
need to balance understanding of firm performance across these dimensions and also the leading
effects of the internal perspective, the customer perspective and innovation and learning
perspectives predicting the financial perspective outcome. Thus, based on the received literature
review, competitive advantage and organization performance are different research constructs.

Newbert (2008) examined the importance of the characteristics of rare and valuable resources
and capabilities on the attainment of competitive advantage and organization performance.
Newbert (2008) found a positive correlation between the attainment of competitive advantage by
a firm and better organization performance. Blending learning from the insights of Kaplan and
Norton (1992, 1996) and Newbert (2008) yields the propositions: The attainment of competitive
advantage by a firm is a leading predictor of the achievement of strong organization
performance. In other words, if a company has identified their competitive advantage, they will
use it as leverage to perform in the future.
Therefore, Competitive Advantage is not Organization Performance. The synthesis of the
literature here evidences that competitive advantage and organization performance are different
constructs with the attainment of competitive advantage predicting strong organization
performance. Second, based on Porters (1980, 1985) research, competitive advantage can come
from a firm making a sound decision or sound decisions overtime in relation to its generic
position. Firm scale in an industry can be the source of competitive advantage helping the firm to
be the lowest cost producer or have proximity to the lowest cost producer while giving greater
benefits to customers in the provision of goods and/or services. Third, firms with rare and
valuable strategy resources give themselves the best probability of making sound positioning
choices, achieving competitive advantage and in time strong organization performance (Newbert,
2008). Fourth, the dynamic nature of the business environment, especially in relation to the
influence of competitors, customers, regulation, technology and supply of finance is such that the
achievement of competitive advantage is a dynamic bargain dynamic in terms of some firms in
some circumstances being able to achieve sustained competitive advantage and some firms in
some industries achieving only temporary competitive advantage.

Prescott, 1987: 223-4

1. Setting objectives:

This is the first phase in the process and is aimed at setting the scene. This phase will
influence all the other phases and should be well-defined. The primary purpose is to
create a clear understanding about the type and scope of the analysis that is to be
conducted. An important part of this understanding relates to the possible constraints that
might be encountered during the process.

2. Data collection:

There is a wealth of information available about the business environment and numerous
techniques have been developed to acquire the relevant information. The modern trend is
for organizations to develop their own specialized skills in information collection,
ranging from database systems to interviews to physical observations. The key to this
stage is to fit the right collection techniques to the objectives of the analysis.

3. Data interpretation:
Once the relevant data has been collected it needs to be analyzed and interpreted before
the results can be used or implemented. There are numerous techniques available to use
when seeking answers to all the questions. It is therefore very important to fit the right
technique to the right situation.

4. Implementation of the findings:

This is a neglected area of competitive analysis and many practitioners are still guilty
today of ignoring good intelligence and making decisions by trusting their instincts.
Communicating the results of the analysis process to the key decision-maker is very
important. Unless the results are incorporated in the decision-making process, there was
no reason to undertake the analysis in the first place.

5. Updating and maintaining the system:

Certain analyses are done on an individual basis, while others are done on a continual
basis. These individual assignments do not need any updating or maintenance, while the
others do require it. Where continual assignments are concerned, there must be a strong
degree of formality and frequency of when updating must be done. The initial objectives
of the analysis process must play a primary role in this decision.

What drives the Competitor ?

What Competitor is doing or capable
of doing?

Competitor response
Objectives Strategy
Resources &

Title: Understanding the Process of Transitioning to Customer Value Management
Authors: B Muthuraman, Anand Sen, Peeyush Gupta, D V R Seshadri, James A Narus
Issue/Year: Apr-2006 / Source: ( The Journal for decision Makers-IIM(A)

Customer Value Management (CVM) has emerged as an important vehicle for customer
retention in business markets. Supplier firms under increasing pressure from relentless
competitive forces are seeking to retain and grow the share of business from profitable existing
customers as a means of finding a way out of downward spiralling price pressures.

While a lot has been written in academics about the importance of CVM, several gaps remain on
understanding how a large company actually undertakes this journey. Crafting competitive value
chains and focusing on streams of competition are also emerging as important agenda for
supplier firms since, increasingly, the end customer is no longer willing to pay for inefficiencies
in the value chains. In this context, the challenge for a supplier firm in business markets is
no longer restricted to getting its own operations in order, but, additionally, it must ensure that
multiple interfaces that exist across the entire value chain all the way until the end customer are
streamlined so that the value chain is free of value drains and every meaningful opportunity to
create value is exploited. In this paper, the authors present the experiences of the India-based
Tata Steel in implementing CVM across 25 select customers. This has enabled it to successfully
come out of the commodity trap that it found itself some four years ago.

The paper begins with an overview of existing research in the area of CVM covering the
important aspects of customer loyalty, customer relationships, trust as an antecedent for
relationships, value as a cornerstone of business markets, and importance of the supplier firm
focusing on the efficacy of the value chain of which it is a part. While one part of the challenge
for a supplier firm is to find avenues to create and deliver unique value to its customer firms, an
equally formidable challenge is to obtain equitable return for value delivered. This is where
value sharing through integrative negotiations between the supplier and customer firms becomes

The authors conclude that current understanding on value creation and value sharing is at a
preliminary stage. This is the gap that the paper seeks to address based on the actual experience
of the company in implementing CVM. This paper presents a framework for mapping the
various ideas generated in the CVM implementation process and attempts to build a value
sharing methodology based on the CVM journey of the company. It concludes with several
challenges that the company has to grapple with for continued progress on its CVM journey. One
of the important challenges is addressing value drains and discovering new value creation
avenues along all the interfaces between the various firms constituting the value chain all the
way until the end customer.

The key learning can be summarized as follows:

Success of CVM has to start from the top management of both supplier and customer
firms. The focal responsibility cannot be delegated.

Firms planning to embark on the CVM journey must adapt the CVM process to their own
specific situations while general lessons can be drawn from Tata Steels CVM
implementation experience.

Meaningful roles must be found for all key managers in both supplier and customer firms
for success of CVM implementation.

It is necessary to take stretch targets for the process to be attractive and worth the while
for both the firms. At the same time, it is essential to manage the expectations of both
firms: CVM is not a panacea or a magic bullet to solve all the problems of both the firms.

The overall philosophy of both firms must be to seek to expand the value pie, thus
coming up with integrative decisions based on aligned data where both the firms read off
the same page of data.

Title: Reinventing a Giant Corporation -The Case of Tata Steel
Authors: D V R Seshadri, Arabinda Tripathy
Issue/Year: Jan-2006 / Source: ( The Journal for decision Makers-IIM(A)
Unlike never before, companies have to constantly watch out for inflection points which are
essentially break or make situations that a company finds itself in from time to time. The case of
Tata Steel focuses on the journey of the company in addressing a major inflection point during
the early nineties when the company that was used to a protected environment had to suddenly
face the intense pressures of global competition brought to bear on it due to the liberalization
process. In other words, this case charts the reinvention journey of a large company that had to
reckon with major changes in the environment. Many a company, when faced with such a big
challenge, would have buckled under the consequent competitive forces. The top management of
Tata Steel, however, navigated through this turbulent period in a very effective manner that
resulted in the company entering the new century with renewed confidence. The case ends with
the challenges that the company continued to face towards the end of this decade-long journey.
Figure 1: Tata Steels 3-C Model for Excellence

Figure 2: Indian Steel Scenario during the Late Nineties

Figure 3: Forces Shaping the Indian Steel Industry in the Late Nineties

Dwyer, Shcurr and Oh (1987), in a seminal paper, have suggested that rather than looking at
buyer-seller exchanges as discrete events, it is more appropriate to view them as an ongoing
relationship. They present a framework for enabling supplier firms to develop a marketing
strategy in the context of developing buyer seller relationships.

Anderson and Narus (1991) have suggested that while practitioners and academia extol
collaborative relationships as a panacea, unless there is strategic thinking about working
relationships, the whole partnering effort by a supplier firm with its customer firms can be
wasteful at best and disastrous at worst. They present a step-by-step process of enabling the
company to make this shift towards strategically thinking about collaborative relationships and
then implementing it. The cornerstone of their approach is the central role played by value in
understanding and implementing this shift towards a strategic partnering approach particularly in
business markets.

Marn and Rosiello (1992) remind supplier firms that doing business profitably is the only way of
doing business and caution them that any product offering by a supplier firm can have a wide
pocket price band. In the absence of a disciplined approach to tracking transaction- level
pricing, managers may be gifting away profits often to the wrong customers.

De Souza (1992) suggests that supplier firms should closely monitor and actively manage
customer defection. According to him, the company should identify and erect barriers that
prevent its chosen customers from switching to competitors.

Jaworski and Kholi (1993) have aptly described as competitor intensity, market turbulence, and
technological turbulence make it imperative for the supplier firm to be market oriented.
However, this is no longer a task for just the marketing and sales functions in the organization
but encompasses all the key functions in the supplier firm as well as in its larger ecosystem of
value creating associated firms in the value chain.

OBrien and Jones (1995) suggest the need for a strategic sustainable approach to achieve
customer loyalty measured in terms of number of years that the customer firm does business with
the supplier firm. They also suggest that a supplier firm must find ways to share value in
proportion to the value the customers loyalty creates for the company: In order to maximize
loyalty and profitability, a company must give its best value to its best customers.

Jones and Sasser (1995) discuss the intrinsic non-linearity of the relationship between customer
loyalty and customer satisfaction and conclude that it is important from the supplier firms
perspective to completely satisfy its chosen customers in order to obtain the customer firms
loyalty and better achieve long-term financial performance, especially in intensively competitive
commodity markets. They advocate the need to carefully choose the right customers and have
robust processes to serve them.

Reichheld (1996) discusses the many challenges in retaining good customers. Among these, he
cites inadequate understanding on the part of supplier firm manager about what goes into
retaining a good customer, inability to confront unpleasant truths, the supplier firms
organizational dynamics, difficulty in analysing the customer defection problem, etc. They
demonstrate a strong negative correlation between customer defection and cash

Hammer (1997), in his landmark work, presented the picture of an organization as a summation
of value-adding processes. He suggests (Hammer, 2001) that the firm must seek to virtually
integrate so as to be an effective part of a competitive value chain rather than attempt to do
everything by itself through vertical integration. In this way, each firm in the value chain seeks to
do what it is best at doing thus maximizing value creation for the end customer.

(El Sawy and Bowles, 1997), In view of rapid globalisation that has created a more competitive
environment, businesses are moving closer to their customers than ever before by creating value
and placing priority on customer relationship rather than just selling. It is also five times more
costly to secure a new customer than maintaining existing ones.

Reichheld (2001) presents a prescriptive approach for a supplier firm to build loyalty with its
various stakeholders and, more particularly, ways of building customer loyalty. Among them
are: the ability of the supplier firm to pick the right customers, a culture of seeking out and acting
upon customer feedback, and rewarding loyalty.

Bendapudi and Leone (2001) point out the vulnerability that this could pose in that a star
customer account manager leaving a supplier firm may, in turn, catalyse the drift of the customer
firm away from the supplier firm and into the hands of a competitor. They suggest various
solutions a supplier firm could adopt to address this concern which include simultaneously
developing broad and deep bonds with the customer firm that transcends any one employee and
proactive communication with the customer firm.

Reinartz and Kumar (2002) caution that, while customer loyalty is very important and enticing,
a supplier firm must ensure that it does not seek to enhance customer loyalty as a pursuit in itself
without simultaneously addressing the important issue of customer account profitability. Based
on their research, they have concluded that no company should ever take for granted the idea
that managing customers for loyalty is the same as managing them for profits. They have also
developed an elegant framework for segmentation of customers on the twin dimensions of
loyalty and profitability and suggest that the supplier firm should seek to implement a loyalty

Rigby, Reichheld and Schefter (2002) posit that blind implementation of such packages without
a strategic approach to managing customer relationships could take the supplier firm on a
disastrous course. They urge instead that the firm creates a robust customer strategy before
taking the plunge to implement CRM packages. They also discuss the broader challenge of
managing organizational change before embarking on implementing CRM packages.

George kuk (2004) investigated the determinants and outcomes of VMI in electronic industry
through survey of 94 employees of 25 companies who fully implemented VMI. Four hypotheses
were created having 3 independent variables: organization size, number of employees involved
in VMI and type of logistic integration, 3 dependent variables: information quality enhancement,
service quality improvement and cost reduction. Through ANOVA testing it is analyzed that
large level of employee involvement, small size of organization and integrated logistics achieves
more benefits of VMI. It is suggested that implementing VMI is not solo effort it can be
beneficial if company wide effort is involved.

Brendra k et al (2004) investigated how the substitution brand competition gives benefit to
retailer in VMI. Two level supply chain is taking having one retailer and 2 manufacturer of
competing substitutable brand and through analysis of mathematical model it is found that VMI
gives benefits to retailer as compare to non VMI as due to increase competition manufacturer
stock more to reduce risk of stock out which in turn reduces retailer holding and shortage cost
and increases its profit. For future research it is suggested to include inter retailer intra brand
substitution competition.

Pamela danese (2006) identified the way to use extended vendor managed inventory (VMI) both
upstream and downstream amongst various supply chain partners to organize the information and
material flows. Case study analysis approach is used taking supply chain network of leading
pharmaceutical company GlaxoSmithKline (GSK). Through collected data it is shown that
Information flows among the supply network members, information systems and performance
monitoring system are some of the requisite of extended VMI. In GSK Information flow is
achieved by EDI system which enhanced the service level, production capacity, and the
inventory management. Central information system helps in production planning and order cycle
processes in upstream and downstream supply network. Performance monitoring system
motivates and improves the performance and allows supply chain members to overcome their
reluctances to share information. It is suggested that collaborative planning, forecasting and
replenishment (CPFR) should be taken into consider future research on extended VMI.