Chapter 5- Analyzing the Marketing Environment

Chapter 5- Analyzing the Marketing Environment - levels in...

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Porter’s 5 Forces - Main objective: give you an idea whether an industry is profitable or not - What is the average industry profit you should expect 1) Threat of New Entrants - difficult to start a new airline company because: capital/resources, technology, reputation = Barriers to entry - threat of new entrants is low because of the barriers to entry, because of this the companies in the industry have a higher profit 2) Threat of substitute products or services - other air transport, helicopters - all other modes of transportation - indirect and direct substitutes - EX: Coca-Cola , indirect= water, direct= Pepsi - The higher the number of substitutes the lower the industry profits 3) Bargaining power of buyers/consumers - airlines themselves, Delta, United - when consumer power is high, profit is typically lower 4) Bargaining power of suppliers 5) Rivalry among existing competitors Structure > Conduct > Performance Industry structure explains how firms in the industry compete which result in lower
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Unformatted text preview: levels in industry profit. Coffee Retail Industry 1) Threat on new entrants- moderate/high, because capital requirements for a coffee shop are not too high- need to build reputation - how does this impact profit? It’s lower 2) Bargaining power of suppliers- buyer (starbucks) has the power because 1 bag of coffee is ~20 cents but they sell for ~3$ 3) Threat of substitute products or services- Redbull 4) Bargaining power of buyers/ consumers What is a company’s core competency?-Pepsi’s core competency is being able to bottle beverages, distribute to stores and promote their brand. Competitors-Know strengths and weaknesses Macro-environmental Factors-Culture, understanding the culture -Demographics,-Gender-Ethnicity-Social trends, more thrifty, health and wellness concerns, greener consumers, privacy concerns, time-poor society-...
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