Chapter Five Marketing & New Venture Development
Chapter Five Marketing & New Venture Development
Information for marketing decision making may be broadly classified as: (i)
strategic (ii) tactical (iii) Data bank.
The first type refers to information needed for strategic decisions, e g. whether to
enter a specific overseas market or to diversify into new markets; the second
type relates to information for tactical decisions such as planning of sales
territories the third type provides essential background knowledge about, for
example, competitors’ activities, market trends etc.
5.3 Competitive Analysis
A competitive analysis is essentially a structured method of examining an
organization or industry in order to provide a clear understanding of the
factors that affect a business.
Porter’s Five Forces Model
When suppliers have more control over supplies and its prices that
segment is less attractive. It is best way to make win-win relation
with suppliers. It’s good idea to have multi-sources of supply.
5. Bargaining power of Buyers
Bargaining Power of Buyers means, How much control the buyers have
to drive down your products price, Can they work together in ordering
large volumes. Buyers have more bargaining power when:
– Few buyers chasing too many goods
– Buyer purchases in bulk quantities
– Product is not differentiated
– Buyer’s cost of switching to a competitors’ product is low
– Shopping cost is low
– Buyers are price sensitive
Buyer’s bargaining power may be lowered down by offering
differentiated product. If you’re serving a few but huge quantity
ordering buyers, then they have the power to dictate you.
Michael Porters five forces model provides useful input for SWOT
Analysis and is considered as a strong tool for industry competitive
analysis.
5.4 Marketing Strategies for Competitive Positions
Market Leader
Market Challenger
Market Follower
Market Nicher
1. Market Leader
The market leader is dominant in its industry. It has substantial market share and
often extensive distribution arrangements with retailers. It typically is the industry
leader in developing innovative new business models and new products (although
not always). It sometimes has some market power in determining either price or
output. Of the four dominance strategies, it has the most flexibility in crafting
strategy.
Market leader strategies (main options available):
1.Expand the total market by finding
New users of the product
New uses of the product
More usage on each use occasion
2.Protect your existing market share by:
Developing new product ideas
Improve customer service
Improve distribution effectiveness
Reduce costs
3.Expand your market share:
by targeting one or more competitor
without being noticed by government regulators
2. Market Challenger
A market challenger is a firm in a strong, but not dominant position that
is following an aggressive strategy of trying to gain market share. It
typically targets the industry leader (for example, Pepsi targets Coke),
but it could also target smaller, more vulnerable competitors.
3. DIFFERENTIATION STRATEGY