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 New

Competition Competitors Business
Models

New New
Customers Conventional Value Customers
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

Analyze
AnalyzeCompetition
End-Users

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.”*
 Product – Market Boundaries and Structure

• Determining Product-Market Boundaries

and 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 RESTAURANT
S
 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

Cereal •Product
s Type

Ready to •Variant A
eat Regular
Natural •Variant
Nutritional Pre-sweetened
B

Life Product 19 Special K •Brand

s
 Identifying and Describing Buyers

• 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

Bottl Video
Fast e Games
Food water
Regular
colas Diet lemon Ice
Beer limes Cream
Diet-
Rite
Fruit Cola
flavore Diet
Diet Pepsi
d Coke Wine
colas Product from
competition: Lemon
Product category
diet colas limes
Juice competition:
s soft drinks
Coffe
Generic competition: e
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)
 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