Giáo trình: Marketing Management_ Chapter 06

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Chapter
Chapter
6
6
Market
Market
Structure
Structure
and
and
Competitor
Competitor
Analysis
Analysis
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Key Learning Points
Key Learning Points


Performing a market structure
Performing a market structure
analysis, which identifies your major
analysis, which identifies your major
competitors.
competitors.


Performing a competitor analysis.
Performing a competitor analysis.



Alternative sources of information
Alternative sources of information
for analyzing competitors.
for analyzing competitors.


Using game theory in the
Using game theory in the
development of competitive strategy.
development of competitive strategy.
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Product & Service
Product & Service
Decisions
Decisions
“
“
The purpose of a market structure
The purpose of a market structure
analysis is to enable the marketing
analysis is to enable the marketing
manager to understand who the
manager to understand who the
competition is. Misidentification of
competition is. Misidentification of
the competitive set can have a
the competitive set can have a
serious impact on the success of a
serious impact on the success of a

marketing plan, especially in the
marketing plan, especially in the
long run.
long run.
”
”
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- Russell S. Winer
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Overview
Overview


Importance of Market Structure and
Importance of Market Structure and
Competitive Analysis:
Competitive Analysis:
–
–
Allows firms to determine which other
Allows firms to determine which other
products are competing against their
products are competing against their
products for the same customer benefit.
products for the same customer benefit.
–
–
Crucial to understanding / developing a
Crucial to understanding / developing a
value proposition and appropriate

value proposition and appropriate
marketing implementation decisions.
marketing implementation decisions.
–
–
Allows firms to be proactive and
Allows firms to be proactive and
anticipate competitive actions.
anticipate competitive actions.
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Market Structure Analysis
Market Structure Analysis


Identifying competition is critical
Identifying competition is critical
–
–
Failing to identify a competitive threat
Failing to identify a competitive threat
can have disastrous consequences.
can have disastrous consequences.
•
•
New product forms (e.g. electronic watches
New product forms (e.g. electronic watches
in the 1970
in the 1970
’
’

s) can become key competitors.
s) can become key competitors.
–
–
Competitors must be identified in order
Competitors must be identified in order
to properly compute market share.
to properly compute market share.
•
•
Market share =
Market share =
“
“
(us / us + them)
(us / us + them)
”
”
•
•
Unethical managers can manipulate market
Unethical managers can manipulate market
share computations by changing
share computations by changing
competitors included in calculation.
competitors included in calculation.
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Market Structure Analysis
Market Structure Analysis



Methods of Identifying Competitors
Methods of Identifying Competitors
–
–
Supply
Supply
-
-
based approaches
based approaches
•
•
Classify competitors based on objective
Classify competitors based on objective
attributes.
attributes.
–
–
Demand
Demand
-
-
based approaches
based approaches
•
•
Classify competitors based on customer
Classify competitors based on customer
attitudes and behaviors.

attitudes and behaviors.
–
–
The Product
The Product
-
-
Industry Hierarchy
Industry Hierarchy
identifies four levels of competition.
identifies four levels of competition.
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Figure 6-1:
Product-Industry Hierarchy
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Market Structure Analysis
Market Structure Analysis


Defining Competition:
Defining Competition:
Demand
Demand
-
-
Based Methods
Based Methods
–
–
Competition can be defined at every

Competition can be defined at every
level of the hierarchy (Figure 6.1)
level of the hierarchy (Figure 6.1)
•
•
This method fails to adequately get at the
This method fails to adequately get at the
heart of competition or market definition
heart of competition or market definition
•
•
Competition is best defined by the
Competition is best defined by the
customer, rather than by the marketing
customer, rather than by the marketing
manager, as implied in the following
manager, as implied in the following
definition.
definition.
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Product & Service
Product & Service
Decisions
Decisions
“
“
An industry should be
An industry should be
recognizable as a group of
recognizable as a group of

products that are close
products that are close
substitutes to buyers, are
substitutes to buyers, are
available to a common group
available to a common group
of buyers, and are distant
of buyers, and are distant
substitutes for all products not
substitutes for all products not
included in the industry.
included in the industry.
”
”
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-Joe S. Bain
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Market Structure Analysis
Market Structure Analysis


Defining Competition:
Defining Competition:
Demand
Demand
-
-
Based
Based
Methods

Methods
–
–
Figure 6.2 defines competition from the
Figure 6.2 defines competition from the
customer
customer
’
’
s perspective.
s perspective.
•
•
Product form competition:
Product form competition:
narrowest form, includes
narrowest form, includes
products of the same product type.
products of the same product type.
•
•
Product class/category competition:
Product class/category competition:
products with
products with
similar features that provide the same basic function.
similar features that provide the same basic function.
•
•
Generic competition:

Generic competition:
products that fulfill same basic
products that fulfill same basic
need.
need.
•
•
Budget competition:
Budget competition:
products that compete for the
products that compete for the
same discretionary budget dollars.
same discretionary budget dollars.
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Figure 6-2:
4-Level Model of Competition
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What brands, products,
What brands, products,
or services would you
or services would you
classify as product form,
classify as product form,
product class, generic,
product class, generic,
and budget level
and budget level
competitors?
competitors?
Discussion Question

Consider the
Consider the
DiGiorno
DiGiorno
brand of frozen pizza.
brand of frozen pizza.
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Market Structure Analysis
Market Structure Analysis


Four
Four
-
-
level model of competition implies
level model of competition implies
different tasks for each competitive level:
different tasks for each competitive level:
–
–
Product form competition:
Product form competition:
aim marketing
aim marketing
activities at direct competitors.
activities at direct competitors.
–
–
Product class/category competition:

Product class/category competition:
convince
convince
customers that your product form is best in
customers that your product form is best in
the category.
the category.
–
–
Generic competition:
Generic competition:
convince consumers of
convince consumers of
the superiority of your product category
the superiority of your product category
’
’
s
s
ability to satisfy needs over other categories.
ability to satisfy needs over other categories.
–
–
Budget competition:
Budget competition:
same challenge as with
same challenge as with
generic competition.
generic competition.
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Market Structure Analysis
Market Structure Analysis


Four
Four
-
-
level model of competition:
level model of competition:
–
–
Cross
Cross
-
-
elasticity of demand is often
elasticity of demand is often
used as an indicator of substitutability
used as an indicator of substitutability
when defining generic competitors.
when defining generic competitors.
•
•
The percentage change in product A
The percentage change in product A
’
’
s sales
s sales

due to the percentage change in product
due to the percentage change in product
B
B
’
’
s sales is termed cross
s sales is termed cross
-
-
elasticity.
elasticity.
•
•
Positive cross
Positive cross
-
-
elasticities
elasticities
indicate that the
indicate that the
two products are competitors.
two products are competitors.
•
•
Major problem relates to interpretation of
Major problem relates to interpretation of
cross
cross

-
-
elasticities
elasticities
.
.