session 9 - Porters five competitive forces Potential...

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1 Porter’s five competitive forces Industry competitors Rivalry among existing firms Potential entrants Substitutes Suppliers Buyers Bargaining power of suppliers Bargaining power of Customers Threat of new entrants Threat of substitute products or services Profit = Revenue – Costs
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2 Porter’s 5 Forces – Expanded BARRIERS TO ENTRY Patent or proprietary know-how High switching costs Absolute cost advantages High fixed cost /Economies of scale Government policy Brand identity Restricted distribution channels Expected retaliation SUPPLIER POWER Supplier concentrated (a few firms provide the most of the supplies) Threat of forward integration Significant cost to switch suppliers Presence of substitute inputs BUYER POWER Buyer concentrated ( a few buyers purchase the most of the market share) Credible threat of backward integration no significant switching cost Substitutes available THREAT OF SUBSTITUTES Switching costs Buyer inclination to substitute Price-performance trade-off of substitutes DEGREE OF RIVALRY Exit barriers Industry concentration Fixed costs Industry growth Product differences Switching costs Storage cost
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3 Summary: Marketing strategy Frameworks are similar, because the goal is profit Although similar, frameworks may be more or less appropriate in different situations 3C (5C), SWOT, and Porter’s 5 forces: Snapshot in time, situation evaluation, static, while Ansoff matrix and BCG matrix are more appropriate for time trend analysis, dynamic tool; SWOT is easy to use, but tend to be subjective; Criticism of BCG: whether it is cash cow or dog depends on the definition of market, growth rate is only one measurement of attractiveness of an industry, relative market share is only part of the profit; Criticism of Ansoff’s matrix: sometimes it is hard to see whether it is a new market/product, no account for the growth via vertical integration; Criticism of porter’s 5 forces model: does not account for other forces, not really exclusive, what is their relative importance, static nature “Frameworks” “formulae” – you make decisions!
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4 Marketing Strategy Segmentation, Targeting, and Positioning “It’s cheaper to buy a brand on Wall Street than to build a brand on Main Street.” - Unknown Marketing Management Qiang Liu
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5 Agenda Developing Marketing Strategy: STP Introduction to STP Segmentation Targeting Positioning
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6 Integrated framework for marketing strategy Sustainable Competitive Advantage Product Price Promotion Place Appraise the Situation What business are we really in? What is the
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This document was uploaded on 02/06/2011.

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session 9 - Porters five competitive forces Potential...

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