Marketing

A buyer group is powerful if:

• – there are few buyers
• – it purchases large volumes relative to seller sales
• – the industry’s products are standardized or undifferentiated
• – buyers face few switching costs in changing vendors
• – it is price sensitive
• – buyers can credibly threaten to integrate backward
• – the industry’s product is unimportant to the quality of the buyer’s product or services

--> 10 camels and 5 tourists

A supplier group is powerful if

• – it is dominated by a few companies
• – it is more concentrated than the industry it sells to
• – the industry is not an important customer of the supplier group
• – its product is an important input to the buyer’s business
• – there is no substitute for what the supplier group provides
• – suppliers offer products that are differentiated
• – it has built up switching costs for the buyer
• – the supplier group can credibly threaten to integrate forward into the industry

--> 5 camels and 10 tourists

The intensity of rivalry is greatest if:

• – competitors are numerous or roughly equal in size and power
• – industry growth is slow
• – exit barriers are high
• – fixed costs are high
• – capacity must be expanded in large increments to be efficient (risk of overcapacity)
• – the product is perishable (verderblich)
• – products or services are nearly identical and there are few switching costs for buyers

High entry barriers lead to low threat of new entries

• – Economies of scale
• – Product differentiation
• – Capital requirements
• – Customer switching costs
• – Unequal access to distribution channels
• – Restrictive government policy
• – Cost disadvantages independent of scale

The threat of a substitute is high if

• – it offers an attractive price-performance trade-off to the industry’s product.
• – the buyer’s cost of switching to the substitute is low.

Market capacity is a theoretical maximum size; it indicates the theoretical capacity of a market without regard to prices and purchasing power. Market capacity is a quantity that can change depending on the size of the market base (number of users).

Market potential is the equivalent of demand for a good or service at a specific price.

Market volume comprises the sum of all the actually realized turnovers of all the suppliers on the market. In cases in which market supply is adequate, market potential and market volume correspond with each other.

Market share is a KPI that puts a company’s own production or sales volume in proportion to the total market. As a key indicator, it is of major strategic importance because in many markets, the competitor with the biggest market share has advantages, for example regarding brand awareness, production costs and network effects.

Segmentation: Dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

• Shrinking of the existing market segment
• Economic marketing goals cannot be realized within the existing market segment(s)
• Competitors’ activities
• Claims of other stakeholder groups

• Target groups have an increasingly negative opinion of the product
• Lack of a comparative competitive advantage; little prospects of catching up with competitors
• Lack of economic attractiveness of existing target group(s)

What are the risks associated with the repositioning of a product or a brand?