marketing analysis

industry definition

collection of comeptitiors that produce similar or subsitutie products to a defined market

industry segments

formed as the products or services of the industr ar targeted to particular subsets of the general market

• still reffered as “the industry” even if segment

why do we need to define an indsutry when developing busienss plan

• to target reserach scope and effort - target those most likely to buy our proudce

• application of models are more definied

• better comparisons of compettion

• can define correct competitiors

charestics of industry strucutre

• industry size

  • sales? dollars? in units? number of employees?

• growth rate

  • in profit levels, employee numbers, sales, product#

• major events

  • ex. regulations/supplies/manufacturing/tech improviemtns/developmetns

• industry stages - new, mature, growth, decline

• industyr major particpatns (suppliers, processors,r etailers, buyers) and supply channels (mergers, buyouts, market pwoer, particpants)

what kind of models to use in industry strucutre

• industry concentration

• industry life cycle

• supply channel, integration and market power

industry concentration model

four firm concnetration ratio model

• represtns percentage of total industry sales accounted for by the four largest firms in the industry

• high = 80-100%

• medium = 80-50%

• low = 50-0%

industry life cycle model

• used to define where your industry is now and where it is going and when

• reconginzes that industries evolve over time, structurally and interms of overall profit and revune

• measured in total industry sales and growth in total inddsutry sales

• not the same as product lifecycle betcasue theres a constant updating of products

5 stages of industry lifecycle

• emerging

  • traits = hihg innoviation, high differntiaion, little compeition, high risk

  • key sucess factor = innovation

• gorwth

  • high growth, poor negotiation power of buyers, few barreirs to entry, high profitablity, low risk

  • growth

• consolidation

  • slower growth, high comeptition, profitablity is reduced

  • stragegic managment and finacial power

• mature

  • low growth, standardiziation, high barreirs to entry, higher negoation power of buyers

  • marekt size and costs

• decline

  • low differnciation, extremem comeption, poor profitabilty, high risks

  • costs

supply channel, integrationa nd market power model - what to include

• detail of how product flows through channels

• indsutyr partiaptns in channel and intermareis- names and size

• information on market pwoer and integratio in market - vertical, horizontal, where is the power held

defintion of supply channel and indistry partiapnts

• system of organizatins, ppl, activites, information and resoruces invovled in moving a product or service from supplier to end customer

• enterie process of getting from manufacture to consumpiton

supply channel structure

1. supplier

2. manufature

3. wholsaer

4. retailer

5. customer

vertical integration

when company extends operations WITHIN THE SUPPLY CHAIN by buying out a company in the stage before or after

• moving up and down the supply channel structure

• ex. manufaturing buying out a wholsaler

• up = bacwards

• down = forward

what is the value of vertical integration

• cuts down costs and be more effeicnent to grow and gaining more profits - moving from one supply chain to antoher

• cutting costs on admin. ex. only need one ceo

horizontal integration

company extends operations WITHIN THE SUPPL CHAIN by exapnding WITHIN THEIR OWN STAGE

• ex. manufature buys out manufatorer

value for horizontal integration

• be more competitive- buy out your comepiton

• be bigger and cut down on costs, more effiicent= be more comeptitive

• if buisenss wants mroe profit, theres only so much of the market, buy out someone elses peice of the same size pie

gainsof vertical and horizontal integration

• decrease comeption

• increase market share

• diversify gains/prfits from economis of scale/cost synergies

• reduce supply uncertainty and quality varaiton - more control over quality

  • ex. mcdonalds

• increase market power to coordinate

  • bigger= more market share= more power

losses of vertical and hroizontal integration

• consumer face lower product options and higher price

• anti-comptiiton concerns

• too big and too inflexible- ig another coapny wants to buy you out, goverment has to authroize it.

industry structure - market power

abilty of the firm to control or influece supply channel prices, goods, and movment over other channel members

• comes ffrom channel integration or high concnetration

pros and cons of marekt power

• pros- compnay

  • capture ecnomies of scale and scope (hroizontal)

  • reduce supply uncenrtianty and quality variations (vertical)

• cons - consumer

  • comapnies can raise prices above marginal costs

  • reduces consumer welfare

  • traditonal price discocery fails

    • Price discovery is the process where buyers and sellers determine where a transaction can take place based on supply and demand.

role of goverment and anticoomeption/antitrust

indsustry trends- external trends vs internal

- major external and UNCONTROLLABLE FACTORS that influece organiziatons decsion making and affect its perfomance and stragies, factos include:

• ecnomic

• demographic

• legal

• poltical

• social conditons

• tehcn changes

• natural forces

hihg imapct trends SPECFIC to industry

when and how to use PESTLE

for external trends- a broad assemesnt of key features of the external envioment facing a busienss

1. research and review each pestle indempently

2. detmerine relative impac on firm /sector

   1. dont include items that have low to md impact on the indsutry

   2. one factor may dominate or have more info depending on the indsutyr you are anazlying

whena nd how to use trend analysis chekclist

for internal and indsutyr sptecifc trends- future focused

• checklist, includes major trends

  • market size, prpofit, gorhwt, supply, demand changes predicted

  • buyer patterns, target audience,s societal, population

  • disturubiton channels: retailing, manufacturing and suppliers

  • product and tehc

  • cliamte and enviormenal

  • legal , regulatin, trade

  • new entrants- small or slare companies