Slide 1

Part 4: Building Strong Brands> Product Life-Cycle Marketing Strategies> PLC Critique & Market Evolution> Competitive forces> Identifying Competitors> Analyzing CompetitorsClass Presentation | Session 16 | 11 Oct 2010MG 220 Marketing ManagementMBA 10Fall 2010

Muhammad Talha Salam, Asst. Professortalha.salam@nu.edu.pkAccess it online: www.slideshare.net/talhasalamProduct Lifecycle Marketing Strategies1: Introduction & Pioneer Advantage | 2: GrowthIntroduction Stage & Pioneer AdvantageProfits are low or negativePromotional expenditure to sales ratio: very highBecause of need to announce & establishBeing first is both rewarding and riskyPioneer advantage: if brand satisfies needs, strong recallFirst mover advantage but segment-by-segment invasion is requiredGrowth StageRapid climb in sales & New competitors enterPrice same or slightly increasedPromotional expenditure: same or slightly increased to counter new competitors & further educate marketProfits increase because costs are covered over a larger volume of salesFirm uses several strategies to:Improve product quality & adds new features | add new models | enter new market segments | increase distribution coverageMG 220 Marketing Management2Access it online: www.slideshare.net/talhasalamProduct Lifecycle Marketing Strategies3: Maturity | 4: DeclineMaturityMuch longer period | Most products are in this phaseSale growth is generally slowThree stages in maturity phase: growth | stable | decayingStrong competition starts & competitors are finding new areas to work inMarket modification: converting non-users and entering new market segmentsProduct modification: Quality, feature, style improvementMarketing Program modification: Reviewing marketing strategies including 4PsDecline StageSeveral reasons: technological advances | shifts in consumer tastes | inc. competitionIncreased price-cutting & profit erosionDecline may be slowFirms may withdraw market as wellChoosing between divesting (abandoning product line) and harvesting (gradually reducing product/businesss costs while trying to maintain sales)MG 220 Marketing Management3Access it online: www.slideshare.net/talhasalamPLC Critique & Market Evolution

PLC: CritiquePLC patterns are too varied in shape and durationIts very hard to determine which stage it isAlso, decline or growth may be because of some anomalous factors

Market EvolutionMarket-oriented picture vis--vis PLCs product-oriented oneMarkets evolve through 4 stages:EmergenceMarket exists as a latent market initially. Launching a new product begins emergenceGrowthIf new product sells well, competitors enter and grow the marketMaturityEventually all segments are covered. Competitors compete fiercely and everyones profits declineDeclineDemand for product begins to decrease may be because of a new technologyMG 220 Marketing Management4Access it online: www.slideshare.net/talhasalamCompetitive Forces

Michael Porters Five Forces Model

Threat of intense segment rivalryINDUSTRY COMPETITORS intense rivalry can make a segment unattractiveThreat of new entrantsDepending on what kind of entry & exit barriers existIf both are high: profits are high and risks are high tooIf entry is high but exit is low: firms enter If both are low: returns are low and stableThreat of substitute productsIf there are actual or potential substitute productsThreat of buyers growing bargaining powerIf buyers possess strong or even growing bargaining power, it can erode marginsThreat of suppliers growing bargaining powerIf suppliers can raise prices or reduce quantity supplied and have bargaining power it can make an industry unattractive MG 220 Marketing Management5

Access it online: www.slideshare.net/talhasalamIdentifying Competitors

Taking a broad view of competitors is very important - examplesTwo key views of CompetitionIndustry concept of competitionIndustry is a group of firms that offer a product or class of products that are close substitutes for one anotherIndustries are classified according to:Number of sellers & Degree of DifferentiationPure MonopolyOnly one firm provides product/service in a category or areaE.g. PTCL (previously) or LESCO in Lahore etc.OligopolyFew (generally large) companies in same categoryE.g. OMCs in PakistanMonopolistic CompetitionMany competitors able to offer and differentiate their offerFast food industry in PakistanPure CompetitionToo many competitors offer same product and compete at same levelCommodity market / stock market etc.MG 220 Marketing Management6Access it online: www.slideshare.net/talhasalamIdentifying Competitors

Industry concept of competition (contd)Entry, mobility & Exit barriersEntry barriers (how easy it is to enter a market)Mobility barriers (how easy it is to move to attractive segments)Exit barriers (how easy it is to move out)Cost StructureSome industries are capital intensive e.g. steel manufacturingDegree of Vertical IntegrationDegree of Globalization

Market Concept of CompetitionMarketers need to stay away from marketing myopia and identify direct & indirect competitorsA broad set of competitors exist need to be profiled carefullyExamplesMG 220 Marketing Management7Access it online: www.slideshare.net/talhasalamAnalyzing Competitors

StrategiesStrategic Group: a group of firms following same strategy in a given marketObjectivesGenerally competitors try to maximize profitsBut other concepts may also exist and may be followed e.g. short-term or long-term profitsAn alternative assumption: Companies pursue a mix of strategies, profit, market share growth, tech leadership etc.MG 220 Marketing Management8Access it online: www.slideshare.net/talhasalamAnalyzing Competitors

Strengths & WeaknessesMonitoring competitors strengths & weaknessesThree variablesShare of market (%age share)Share of mind (name brand coming to your mind for a category)Share of heart (brand you ll prefer to buy for a category)Companies gaining share of mind and share of heart eventually gain share of marketSelecting CompetitorsHow to select competitorsStrong vs. weakClose vs. DistantGood vs. BadMG 220 Marketing Management9Access it online: www.slideshare.net/talhasalamPart 4: Building Strong Brands> Competitive Strategies for Market Leaders> Other Competitive Strategies> Balancing Customer & Competitive Orientations > LEFTOVER TOPIC FROM CHAP 10: Devising Brand Strategy

> Case Study 1: ABN AMRO (Class Discussion)> Quiz 5: Part 4 (Chap 9 & 10 12/ed. OR Chap 10 & 11 13/ed.)Class Presentation | Session 17 | 13 Oct 2010MG 220 Marketing ManagementMBA 10Fall 2010

Muhammad Talha Salam, Asst. Professortalha.salam@nu.edu.pkAccess it online: www.slideshare.net/talhasalam