The Competition

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Know your rivals

If you have no competition, there may be no market for your concept OR you have not done your homework.

Know your competition to learn from them and to better understand what customers want.

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Knowing competition makes strategy When doing your competitive analysis, focus

on identifying this:

1. Who your major competitors are

2. What basis you compete (what features)

3. How do you compare?

4. Potential future competitors

5. Barriers to entry for new competitors

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Market Share Distribution

How large is the industry? Okay, now how large is your market?

What is the market share distrbution among competitors?

What tangible and intangible resources to the market leaders have? Ex. Strategic partnerships, reputation, quality, good design, etc.?

4

Barriers to Entry

If you succeed, what stops others from replicating your success and stealing your market share?

Patents, high start-up costs (manufacturing), Substantial expertise, tacit knowledge, etc.?

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Strategic Position &Risk Assessment

SWOT helps you realize what business you are in.

Helps you assess your risks and lets investors know you have a clear-eyed view of what you are getting into

A strategic position define What you do What you don’t do

Your strategic position should be where you find following coming together: Your strengths and interests Industry trends and developments Market changes and opportunities Competitive changes and opportunities Changes and opportunities brought through new

technologies

What kinds of strategic positions are there? Customer perception factors Market segment Market share Operational/technological advantages Proprietary products, technology, abilities or

relationship Sale channel

What kinds of strategic positions are there? Customer perception factors

Price Quality Features Customer service Societal impact Convenience

Concentrating on customer perception factors is the most typical method of attempting to differentiate yourself from your competitors.

What kinds of strategic positions are there? Market segment : This strategy is based on

targeting on a specific portion of the total market.

Pitfalls of this strategy: The size market may not be enough to sustain or

grow the company The target market may already be saturated with

specialists Enough size but Larger company will come in and

compete with you.

What kinds of strategic positions are there? Market share: this strategy is based on

establishing and commanding such a dominant portion of the total customer base that it becomes difficult for others to compete.

The goal is to become “800 pound gorilla” of a market

What kinds of strategic positions are there? First mover strategy has some advantages:

Capture significant market share before competitors enter the market

Secure key strategic partners, making fewer opportunities available to later competitors

Attract outstanding employees and management Capture media attention Look in financing sources, such as venture

capitalists

Two popular strategy

First mover disadvantages: You serving as the R&D arm of copy-cat

companies Maybe the market is not ready for you. You pay the costs of educating the market and

marketing for other second or third to market companies.

Two popular strategies

Branding strategy has many advantages but: It is usually expensive It is a time consumer process.

A real brand gives customers trust in your products and services because you are consistent in quality, price, service or convenience over time. (e.g. McDonald)

Risk

What kinds of risk? Market risk Competitive risk Technology risk Product risk Executive risk Capitalization risk

Balancing Risks and Opportunities SWOT analysis

Strengths Weakness

Opportunities Threats

Marketing plan &Sales strategy

Tell the customers what they get

Not what you do.

Marketing and sales although are closely related, are two different activities: Marketing is designed to increase customer

awareness and deliver a message. Sales is the direct action taken to procure

customer order.

Your company’s message

Company’s message is based on the strategic position: Low price leader One day service The choice of a new generation ….

The 4 P’s of marketing: Products Price Place Promotion

Most marketing strategists agree that people buy benefits, not features. In other words customers are more concerned about how a purchase will affect their lives than about how the company achieved those results.

Marketing vehicles

Brochures Company Website Print media Broadcast media Online advertising Advertising specialties Direct mail Email Public relations Sampling Informal marketing/networking

Marketing tactics

Strategic partnership Cooperative advertising Licensing Distribution agreement Bundling

Sales activities

Sales personnel Inside sales personnel Outside sales personnel

Sales process On site Mail order Telephone On line Third party

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SWOT

Do risk evaluation and SWOT on p.128-129 SWOT is due on next Monday....................... Wednesday’s class will be on Marketing Plan

Marketing plan will be due on Wednesday

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