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This is the interactive process that occurs in the market place. One firm’s marketing decision influence its market and areas in turn affected by competitor’s decision. The competitive environment therefore often determines the success or failure of a product.
There are three possible avenues of attaining a competitive advantage. An organization can attempt to establish a differentiated offer that is a product or service that is unique in ways that are important to customers. An organization may become the low-cost producer among groups of competitors. The company can operate in a protected market niche.
Industries differ greatly in case of entries. It is easy to open a new restaurant but difficult to enter the aircraft industry. The major entry barriers include high capital requirement, economies of scales, patents and licensing requirement scarce location raw materials or distributors and reputation requirement. Even after a firm enters an industry, it might face mobility barriers when it tries to enter more attractive market segments. He further said that also firms often face exist barriers such as legal or moral obligations to customers creditors and employees, government restrictions, low asst salvage value due to overspecialization and emotional barriers many firms say in an industry as long as they cover their variable costs and some or all of their fixed costs.
Once a company has conducted customer value analysis and examined competitor carefully it can focus its attack on one of the following class’s competitor. He added that many companies aim their shots at weak competitors because this requires fewer resources per share point gained. The firm should also compete with strong competitors to keep up with the best. Even strong competitors have some weakness.
Most companies’ compete with competitors who resemble them the most companies should also recognize distant competitors. He added that every industry contains good and bad competitors. Accompany should support its good competitors and attack its bad competitors. Good competitors play by the industry’s rules they favor a healthy industry, they limit themselves to a portion or segment of the industry, they motivate others to lower their share costs or improve differentiation and they accept the general level if their share and profits. While competitors try to buy share rather than earn it’s they take large risks, they invest in overcapacity and they upset industrial equilibrium. Since the reader is like a large elephant being attacked by a swarm of bees. This can be done through continuous innovation: developing new products and customer Kottler said a dominant firm can use the following defense strategies.
He added that it involves occupying the most the most desirable market place in the minds of consumers, making the brand almost impregnable like tide laundry detergent with cleaning and pampers diapers with dryness. He further said although position defense is most important, the market leader should also erect outposts to protect a weak front or possibly serve as an invasion base for counter attack. He concluded that more aggressive maneuver is to attack before the enemy starts its offense. It can do these through wage guerrilla action across the market, hitting one competitor here and another there and keep everyone if balance or it can try to achieve grant market development. It can send out market signals to dissuade competitors from attacking. A new pre-announcement, deliberate communication regarding future actions.
When attacked most market leaders will respond with a counter attack. It can meet the attacker frantically or hit its flank or launch a pincer movement. He said that effective counter attack is to invade the attacker’s main territory so that it will have to pull back to defend the territory. He said it involves the leader stretching its domain over new territories that can serve as future centers for offense and offense through market broadening and market diversification. It involves shifting focus from the current product to the underlying generic need.
Large companies sometime recognize that they can no longer defend all their territory and that best cause of action then appears to be planned contraction, giving up weaker territories and re-assigning resources to stronger territories, Buyers who can readily switch brands or services from several sellers have more negotiation leverage than buyer who has higher switching costs. When the products or service of rivalry sellers at a little or no costs and anxious sellers may be willing to make concessions to win or retain buyers business or service.
In addition the smaller the number of buyers the less easy it is for sellers to find alternative buyers when a customer is lost to a competitor.
The prospect of losing a customer is not easily replaced often makes a seller more willing to grant concessions of one or another weak declining demand creates a buyer market conversely strong or rapid growing demand crates a seller market and shifts bargaining to the seller.
The more valuable that a particular input is in terms of enhancing the performance or quality of the products of industry members or of improving the efficiency of their production process, the more bargaining leverage its suppliers to likely possess. Suppliers of items in short supply have some degree of pricing power whereas a surge in the availability of particular item greatly weakens supplier pricing power and bargaining leverage.
As a rule suppliers have less bargaining leverage when their sales to members of this one industry constitute a big percentage of their total sales. In such cases the well-being of supplier is closely tied with the well-being of the4 major customers. He added that high switching costs signals strong bargaining power whereas low switching costs and availability of good substitute input signals weak bargaining power. In addition a diverse group of sellers often contains one or more mavericks willing to try novel or high risk or rule breaking market approaches, thus generating livelier and less predictably competitive environment.
Far and away the most powerful and widely used tools for systematically diagnosing the principal competitive pressure in a market assessing the strength.
The prospect of losing a customer is not easily replaced often makes a seller more willing to grant concessions of one kind or another weak or declining demand creates a buyers’ market conversely strong or rapid growing demand crates a seller market and Shifts bargaining Power to seller. He said the more information buyers have the better, the bargaining position they are in.
The mushrooming availability of product information on the internet is giving added bargaining Power to individuals, buyers can easily use the internet to compare prices and features of Vocation Packages shop for the best interest rates and mortgages and loans and find the best prices on big tickets items such as digital cameras. Furthermore the internet has created for manufacturers retailers wholesalers and sometimes individual to join online buying groups to pool their Purchasing Power and approach vendors for beer terms that could be gotten individually. Suppliers have little or no bargaining power, industry members have the ability to resource their requires at competitive prices from any of several alternative and eager. Suppliers to promote lively competition for orders the Suppliers of commodity like items have market Power only when suppliers become quit an industry members are so eager to secure what they need that they agree to terms more favorable to Suppliers.
Globally competitive markets often contains rivals with different views about ‘here the industry is headed and willingness to employ perhaps radically different Competitive approaches. When a product is perishable, seasonal or costly to hold in inventory or when demand slacks off, competitive pressures build quickly any time one or more firms decide to cut prices and dump excess supplies on the market.
Likewise wherever fixed assets cost account for a larger fraction of total cost so that unit costs tend to be lowest at or near full capacity, then the firms come under significant pressure to cut prices or otherwise try to boost the sales when offerings of rivals are identified it is usually easy and inexpensive for buyers to switch their purchase from one seller to another. Strongly differentiated products raise the probability that buyers will find it costly to switch brands. Far and away the most powerful and widely used tools for systematically diagnosing the principal competitive pressure on a market and assessing the strength.