Learning Objectives

1. Understand the basic factors used to evaluated Industries and Markets (Segments)

2. Understand how industries and markets evolve over the Product Life Cycle
 

I. Markets versus Industries

     Market is a group of potential customers (consumers/organizations)

     An Industry is a group of firms that offer similar products, close substitutes.

II. Defining Markets

     Market or Segments are conceptual
      They are mental models/ at different levels
      In Principles the market was given (assumed)
      Defining the box

     Modern Marketing Concept- Customer Needs

    A.  Levels of Analysis

          Industry Level

          Product Class

          Product Types

         Other Boundary Factors

                  Product Lines-Product Specialization

                  Types of Customers-Market Specialization

                  Geographic Scope

                  Level of Production-Input, Production, Distribution

III. Market Attractiveness

      Market Evaluation

          Potential

               a. Market Size
               b. Market Growth
               c. Profitability

IV. Industry Attractiveness
 

      Overview (OH)

      1. Segment Rivalry

                Opportunity Potential
                Similarity of Offering
                Homogeneity of the Market
                Industry Structure
                Commitment of Firm
                Exit Barriers
                Economic Conditions
                Diversity of Firms

      2. Threat of New Entrants

                Ease of Entry
 

      3. Threat of Substitutes

                Technological Innovation

      4. Buyer's Bargaining Power
 

      5. Supplier's Bargaining Power

V.  Identifying Your Competitive Set

      1. Strategies

      2. Objectives

      3. Strengths and Weaknesses

           Critical Success Factors

           Competitive Position

                    Past Performance

                    Resources Set

                    Power

                    Top Dogs, Challengers, and Underdogs
 

VI.  What is missing?  Fit

Review

          1. Potential

               a. Market Size
               b. Market Growth
               c. Profitability

 
          2. Competitive Factors

               a. Number
               b. opportunity for SCA

           3. Fit

               a. Strengths and Weaknesses

               b. Objectives, Resources
 
 

 1. The Product Life Cycle

      A. The Framework

           Sales and Profit over the life of a product
           industry.

      B. Characteristics
 

           1. Embryonic

                   Growth-Accelerating but unknown

                   Potential-Difficult to determine

                   Product Line- Narrow

                   Competitors-Few but can increase rapidly

                   Market Share-Concentrated, volatile, uncertain.
 
                    Purchasing Pattern- varies, not clearly defined.

                   Ease of Entry-relatively easy
                      (Assuming no high Barriers)

                   Technology-Match Performance or Multiple Technologies
 

           2. Growth

                   Growth- Rapid

                   Potential- Potential exceeds Production

                   Product Line-Rapid Expansion, Real Improvements
 
                   Competitors-Increases in number & type
                   Can lead to a shakeout

                   Market Share- Rank can change, leaders start to emerge.
 
                    Purchasing Pattern-Loyalties Develop

                   Ease of Entry-Competition is offset by growth

                   Technology-Dominate Technology emerges, better performance.
 

          3. Mature

                   Growth-slow

                   Potential-known, saturation
 
                   Product Line-Broad, Cosmetic Differences

                   Competitors-Stable or Declining, oligopoly

                   Market Share-Stable, major players established, niche competition
 
                    Purchasing Pattern-Buying Pattern Est.
                    Brand Loyalty

                   Ease of Entry-Difficult

                    Technology-minor improvements, outside
                    Technologies to gain efficiency

          4. Aging

                   Growth-Declining

                   Potential-Saturation, supply exceeds demand.

                   Product Line-Shrinking

                   Competitors-Number Declines

                   Market Share- More Concentrated
 
                    Purchasing Pattern- Strong Loyalty

                   Ease of Entry-Little Incentive

                    Technology-Efforts Elsewhere
 
 
 

     C. Pros and Cons of the PLC concept
 

                Strategies Covered Later