Michael Porter had identified 5 forces that pose threats to long run attractiveness of a market or market segments. These are –
• Threat of Intense Rivalry
• Threat of New Entrants
• Threat of Substitute Products
• Threat of Buyer’s Growing Bargaining Power
• Threats of Supplier’s Bargaining Power
A simple way of identifying competition is that Unilever competes with P&G; Sony in India competes with LG, Onida, BPL & so on. However, the range is much broader, e.g. – a TV company competes with ideas like vacation for the family or other gifts for loved ones for a share of customer discretionary income.
INDUSTRY CONCEPT OF COMPETITION
• What exactly is an industry?
o An industry is a group of firms that offer a product or a class of products that are close substitutes for one another. Industry are classified according to –
▪ No. of sellers
▪ Degree of Product Differentiation
▪ Entry and Exit Barriers
▪ Cost Structure
▪ Degree of Vertical Integration
▪ Degree of Globalization
MARKET CONCEPT OF COMPETITION
• Using the market approach competitors are companies that satisfy the same customer need. For e.g.- a customer who buys a word processing package really wants “writing ability” – a need that can also be satisfied by pencil, pens or typewriters.
• The market concept of competition reveals a broader set of actual and potential competitors.
Once a company identifies its primary competitors, the next step is to ascertain their strategies, objectives most important – strengths and weaknesses.
• Info. On competitor’s strengths and weaknesses can be gathered by monitoring three core variables while analyzing competition –
o Share of Mkt. – the competitors share to the target mkt.
o Share of Mind – the % of customers...