1. 3-1
Chapter Three
Markets and
Competitive
Space /
Market Vision, Structure and
Analysis

2. 3-2
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
 Market Size Estimation

3. 3-3
MARKETS AND
COMPETITIVE SPACE
 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

4. 3-4
MARKETS AND
STRATEGIES
Markets and
Strategies are
Interlinked
Forming Value
a Shared Migration
Vision Challenges

5. 3-5
Markets Impact
Strategies
Market changes often require
altering strategies
Forces of change create both
market opportunities and
threats
Inherent danger in faulty
market sensing

6. 3-6
Value Migrations
Customers shift purchasing
to new business designs with
enhanced value offering
Beware of disruptive
technologies
Market sensing and
organizational learning are
essential

7. 3-7
PRODUCT-MARKET
SCOPE AND STRUCTURE
Matching Needs with Product
Benefits
Product-Market Boundaries and
Structure
Forming Product-Markets for
Analysis
The Changing Composition of
Markets

8. 3-8
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.”*
*Srivastava, et al. (1984) Journal of Marketing, Spring, 32.

9. 3-9
Product – Market Boundaries
and Structure
 Determining Product-Market
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

10. 3-10
Illustrative Fast-Food
Product-Market
Structure
SUPER MICROWAVE
MARKETS OVENS
FAST-FOOD
MARKET
CONVENIENCE TRADITIONAL
STORES RESTAURANTS

11. 3-11
Forming Product –
Markets for Analysis
Factors influencing product –
market boundaries:
 Purpose of analysis
 Changing composition of
markets - technology
 Extent of market
complexity

12. 3-12
The Changing
Composition of Markets
Change due to new technologies and
emerging competition
Consider existing and emerging markets
Identify alternative ways to meet needs
Extend product-market analysis beyond
industry boundaries (e.g. Fast-foods)

13. 3-13
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

14. 3-14
Illustrative Product –
Market Structure
Food and beverages •Generic Product
for breakfast meal
Class
Cereals •Product Type
Ready to eat •Variant A
Regular
Natural •Variant B
Pre-sweetened
Nutritional
Life Product 19 Special K •Brands

15. 3-15
DEFINING AND
ANALYZING MARKETS
Define Product-Market
Boundaries and Structures
Identify and Describe End-
Users
Analyze Industry and
Value Added Chain
Evaluate Key Competitors
Forecast Market Size
and Growth Trends

16. 3-16
Identifying and
Describing Buyers
Building
DESCRIBING How
AND Buyers
Customer
Make
Profiles ANALYZING Choice
END-USERS s
Environmental
Influences

17. 3-17
Identifying and
Describing End-Users
 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

18. 3-18
How Buyers Make
Choices
 BUYING DECISION
PROCESS:
1. Problem recognition
2. Information search
3. Alternative evaluation
4. Purchase decision
5. Post-purchase behavior

19. 3-19
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

20. 3-20
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.)

21. 3-21
ANALYZING
COMPETITION
1. Define Industry
Structure and
Characteristics
2. Identify
5. Identify
and
New PRODUCT- Describe
Competitors MARKET Key
STRUCTURE Competitors
AND
MARKET
4. Anticipate SEGMENTS
Actions by 3. Evaluate
Competitors Key
Competitors

22. 3-22
Examples of Levels of
Competition
Baseball
cards
Bottle Video
water Games
Fast
Food
Regular Diet lemon Ice
colas limes Cream
Beer
Diet-Rite
Cola
Fruit
Diet Diet
flavored
Coke Pepsi Wine
colas
Product from
competition:
diet colas Lemon
limes
Juices Product category
competition:
soft drinks Coffee
Generic competition:
beverages
Budget competition:
food & entertainment

23. 3-23
Industry Analysis
 Industry size, growth, and
composition
 Typical marketing practices
 Industry changes that are
anticipated (e.g.
consolidation trends)
 Industry strengths and
weaknesses
 Strategic alliances among
competitors

24. 3-24
Defining Industry
Structure &
Characteristics
SUPPLIERS
Industry Form
Industry PRODUCERS
Environment
Competitive
Forces WHOLESALERS/
DISTRIBUTORS
Value
Added
RETAILERS/ Chain
DEALERS
CONSUMER/
ORGANIZATIONAL
END USERS

25. 3-25
Competitive
Forces
1. Rivalry among existing firms.
2. Threat of new entrants.
3. Threat of substitute products.
4. Bargaining power of suppliers.
5. Bargaining power of buyers.
Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.

26. 3-26
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)

27. 3-27
Extent of
Market Coverage
Current Competitor Customer
Capabilities Evaluation Satisfaction
Past
Performance

28. 3-28
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
Source: C. K. Prahalad, Journal of Marketing, Aug. 1995, vi.

29. 3-29
MARKET SIZE
ESTIMATION
Product-Market Forecast
Relationships
(area denotes sales in $’s)
Market Potential
Estimate
Unrealized
Potential
Company Industry
Sales Sales
Forecast Forecast

30. 3-30
Product-Market
Forecast
Relationships for
Industrial Painting
Units
Sales (in 1000s
of units)
900
800
Market
700 Potentia
l
600 Sales
Forecast
500
400
300
200 Company XYZ
Sales Forecast
100
0
2001 2002 2003 2004 2005 2006 2007 2008