Scribd
Upload
111 views32 pages

Customers: - Suppliers - Competitors

The document discusses factors that influence different types of buyers, including consumers, retailers/wholesalers, and industrial/institutional buyers. It also discusses Porter's five forces model of industry competition and the factors that determine competitive rivalry, threat of substitution, supplier power, and buyer power. Specifically, it examines how demographic changes, geographic shifts, supplier relationships, barriers to entry and exit, and the intensity of competition impact industries.

Uploaded by

anashussain
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
111 views32 pages

Customers: - Suppliers - Competitors

The document discusses factors that influence different types of buyers, including consumers, retailers/wholesalers, and industrial/institutional buyers. It also discusses Porter's five forces model of industry competition and the factors that determine competitive rivalry, threat of substitution, supplier power, and buyer power. Specifically, it examines how demographic changes, geographic shifts, supplier relationships, barriers to entry and exit, and the intensity of competition impact industries.

Uploaded by

anashussain
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 32

Customers Suppliers - Competitors

1. Factors influencing different buyers.

Consumers Availability
Convenience Credit

Price
Quality Reputation

Variety
Warranty

Customers Suppliers - Competitors


1. Factors influencing different buyers.

Retailers and/or Whole-sellers


Competitive product Consumer recognition Product availability Product line breadth Product turnover Profit potential Promotional & merchandising supply Supply dependability
2

Customers Suppliers - Competitors


1. Factors influencing different buyers.

Industrial and/or Institutional buyers


Cost Vs profitability Price Financing Legal conformity Product information Product line Product Performance Source availability Technical assistance
3

Customers Suppliers - Competitors


1. Factors influencing different buyers.
2. Demographic factors: Changes in population, age shifts, Income distribution

3. Geographic factors: New Locations to add markets


4

Customers Suppliers - Competitors


Reference to Michael Porter on relative power of supplier. 1. 2. The power of the supplier to raise profits, the farther away greater the power. The power the supplier has to raise prices and lower buyer profits is reduced if the buying firm is a monopolist or oligopolist. The power is greatest when buyer is not an important customer

3.

4.
5.

The power is greatest when business is integrated.


The supplier threat can be offset by backward integration.

Customers Suppliers - Competitors


Four Factors need to examines regarding competition

1.

Entry and Exit of major competition.

2. Substitutes and Complements for current product of services and major strategic changes by current competition.

Porters Model of Industry Attractiveness


2 Potential Entrants Economies of Scale Absolute Cost Advantage Brand Identity Access to List Switching Cost Government Policy
Threat of Entrant

Suppliers Supplier Concentration Number of Buyers Switching Cost Substitute Raw Materials Threat of Forward Integration.

Bargain Power of Suppliers

1 The Industry Competitions Numbers of Group Industry Growth Access Intensity Product Differentiation Exit Barriers

5
Bargain Power of Customers

Buyers Buyer Concentration List of Suppliers Switching Costs Substitute Products Threat of Backward Integration

Threat of Substitute

3 Substitutes Functional Similarity Price/Performance Trend Product Identity

Barriers to Entry
Economies of Scale Product Differentiation Brand Identity Switching Cost Capital Requirements Access to Distribution Channels Absolute Cost Advantages Proprietary Learning Curve Access to necessary inputs Government Policy Expected Retaliation

Barriers to Exit
Managerial values prevent it Other product services are related to exit candidates Costs are sunk in assets

Direct exit costs are high


Indirect cost may reduce Exit behaviour

Determinants of Rivalry
Industry growth Fixed (or storage) cost/value added Intermittent Capacity Product Differences Brand Identity Switching costs Concentration of Balances Informational complexity Diversity of competitors Exit barriers
10

Determinants of Substitution Threat


Relative price/ Performance of substitute Switching costs Buyer propensity to substitute

11

Determinant of Supplier Power


Differentiation of Inputs Switching costs of suppliers and firms in the industry Presence of substitute inputs Supplier concentration Importance of volume to supplier Cost relative to total purchaces in the industry Impact of inputs on cost or differentiation Threats of forward integration relative to threat of backward integration by firms in the industry
12

Determinant of Buyer Power


Bargaining leverage Buyer concentration vs firm concentration Buyer volume Buyer switching costs relative to firm switching costs Buyer information Ability to backward integrate Substitute products Pull through Price sensitivity Price/Total purchases Product differences Brand identity Impact on quality/performance Buyer profits Decision makers incentive
13

Intensity of Competitive rivalry (rivalry)


Increases and profit falls as numbers of Competitors increase Increases as industry slows Increases, where costs are high Increases as products become less differentiated Increases as industry become more diverse in personality, strategic approach
14

FIGURE

2.2

The Five Forces of Competition Model

15

Barriers to Entry
Economies of Scale
Marginal improvements in efficiency that a firm experiences as it incrementally increases its size

Factors (advantages and disadvantages) related to large- and small-scale entry


Flexibility in pricing and market share

Costs related to scale economies


Competitor retaliation
16

Barriers to Entry (contd)


Product differentiation
Unique products Customer loyalty Products at competitive prices

Switching Costs
One-time costs customers incur when they buy from a different supplier
New equipment Retraining employees Psychic costs of ending a relationship Access to Distribution Channels Stocking or shelf space Price breaks Cooperative advertising allowances

Capital Requirements
Physical facilities Inventories Marketing activities Availability of capital

17

Barriers to Entry (contd)


Cost Disadvantages Independent of Scale
Proprietary product technology Favorable access to raw materials Desirable locations

Expected retaliation
Responses by existing competitors may depend on a firms present stake in the industry (available business options)

Government policy
Licensing and permit requirements Deregulation of industries

18

Bargaining Power of Suppliers


Supplier power increases when:
Suppliers are large and few in number. Suitable substitute products are not available. Individual buyers are not large customers of suppliers and there are many of them. Suppliers goods are critical to the buyers marketplace success.

Suppliers products create high switching costs.


Suppliers pose a threat to integrate forward into buyers industry.

19

Bargaining Power of Buyers Buyer power increases when:


Buyers are large and few in number.
Buyers purchase a large portion of an industrys total output. Buyers purchases are a significant portion of a suppliers annual revenues.

Buyers switching costs are low.


Buyers can pose threat to integrate backward into 20 the sellers industry.

Threat of Substitute Products


The threat of substitute products increases when:
Buyers face few switching costs. The substitute products price is lower.

Substitute products quality and performance are equal to or greater than the existing product.

Differentiated industry products that are valued by customers reduce this threat.
21

Intensity of Rivalry Among Competitors


Industry rivalry increases when:
There are numerous or equally balanced competitors.
Industry growth slows or declines. There are high fixed costs or high storage costs. There is a lack of differentiation opportunities or low switching costs. When the strategic stakes are high. When high exit barriers prevent competitors from 22

Interpreting Industry Analyses


Low entry barriers Suppliers and buyers have strong positions

Strong threats from substitute products


Intense rivalry among competitors

Unattractive Industry
Low profit potential

23

Interpreting Industry Analyses (contd)


High entry barriers Suppliers and buyers have weak positions Few threats from substitute products

Attractive Industry
High profit potential

Moderate rivalry among competitors

24

Different ways a competitive Advantage can be created

Strategies based on Competitive advantage:


SMALL
1) Little Space Strategy: 1. Carve out on position hold it 2. Emhasise profits 3. Minimise investment 4. Caution on expansion 3) A pure Cost Game Strategy: 1. Use aggressive costing 2. Emphasise efficiency 3. Manage increase cash flow 4. Look for Diversification 2) 1. 2. 3. 4. 4) 1. 2. 3. 4.

LARGE
Specialized approach Strategy: Seek niche Select Segments Stay ahead of rivals Watch out for change Those with large competitions adv. Strategy Pursue economics of scale Volume increase Get the Customers of weak firm Get new ways to complete
25

FEW

MANY

Size of the Competitive advantage which can be achieved.

Generic Strategy Alternations


Expand Retrench Stabilise Combination

Products

Add

Drop

Maintain

Markets

Diversify

Drop

Maintain

Process

Forward

Decrease

Maintain

Discuss: Why companies follow different routes of Strategic Alternative


26

Considering Strategy Variations


Possible Strategy Variation
Expansion 1. Internal Stability Retrenchment Reduce Cost, assets, drop production, Markets & Function
Combination

Penetrate existing Reorganize Markets, add new Production production, add New Markets

Subcontracting

2. External Acquisition Mergers 3. Related

Maintain Divest, Market Share liquidation, bankruptcy Eliminate relate production Market or Function

Cross License JV

Seek Synergy Improve from NPD, NMkt, Production or Concentrate

27

Considering Strategy Variations


Possible Strategy Variation
Expansion 4. Unrelated Conglomerate direction in production market or function Add Competitive Product or Markets Add new Function Stability Retrenchment Eliminate relate production Market or Function Eliminate Competitive Product or Markets Reduce Function
28

Combination

5. Horizontal

6. Vertical

Considering Strategy Variations


Possible Strategy Variation
Expansion 7. Active Innovative, Entrepreneuri-al moves Initiator in R&D, New Product Stability Retrenchment Combination

8. Passive

29

Internal Expansion through markets & Products Products


Current New

Current

Markets

Penetrate existing Market(s) with existing Product(s)

Add New Markets

New

Add New Products

Add New Products & New Markets


30

Three Joint Venture Strategies (Strategic Alliance)


1. Spider Web: A small firm establishes and serves Joint Ventures for its survival. 2. Go Together: Joint Ventures for a specific project then quit. 3. Successive integration: From weak relationship to final merger.

31

Competition: A Marketing Warfare


1. Defensive Warfare:

2.
3. 4.

Offensive Warfare:
Flanking Warfare: Guerrilla Warfare:

32

You might also like