Module 7

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Module 7

• Advertising and competition

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Market
Competition
Brand
Module 7
SMART analysis
SWOT analysis
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Market segments (customers)
Types of markets
Market
Changing market
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Markets

• Competition takes place in a market. This does
  not mean that the market has to be a collection
  of stalls, like a second-hand market it doesnt
  have a physical existence or a specific
  location at allit is anywhere that business
  compete.

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The size of market (fast food in U.N)

• The following one

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Fish and chips
Chinese
Curries
burgers
Crisp,peanuts etc
pizza
Sandwich bars
Fast food (hot)
chicken
Fast food (cold)
sushi
food
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Market segments

• Markets are most commonly divided by the
  following
• Age
• Gender
• Geography
• Income and lifestyles

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1.Age

• Different age groups have different patterns of
  spending.
• children under 12s the average age when couples
  get married the time when parents have teenage
  children empty nesters the age of retirement

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2.Geography

• Spending habits vary in different parts of the
  country.
• E.g. in the South East of Britain, many people
  commute to work in London, making this a major
  part of their expenditure.

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3.Income and lifestyle

• Socio-economic groups
• Top earning professional people, eg high court
  judges
• People in management, technical jobs, eg bank
  managers, accountants
• People in supervisory, eg sales assistant,
  secretaries
• Skilled manual workers such as carpenters,
  plumbers
• Semi-skilled manual workers such as assembly
  workers
• Low income groups such as the unemployed, state
  pensioners and students.

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Types of markets

• Competitive
• Oligopoly
• Duopoly
• Monopoly

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Types of markets

• 1.Competitive
• -- when there are a lot of businesses, usually of
  a similar size, competing for customers
• 2.oligopoly
• -- when the market is dominated by just a few
  businesses.
• Eg internationally, the oil market is dominated
  by half a dozen companies.
• In the UK, the supermarkets is an oligopoly,
  where the big four are Tesco, Asda, Sainsburys
  and Safeway.

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Types of markets

• 3. Duopoly
• -- a market which is dominated by just two
  businesses.
• Eg in the UK, the markets for the soap is in the
  hands of Lever Brothers and Procter Gamble
• 4. Monopoly
• -- a market is dominated by a single firm.
• Eg Microsoft Corporation has the monopoly over
  the windows trade mark and operating system.

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Monopoly law badly needed in China

• Some behavior of multinationals affecting market
  competition unfair pricing and deals.
• Eg 1.Microsofts operating system software has
  absolute monopolies, with a 95 percent share of
  the Chinese market.
• 2. Eastman Kodak is expected to further
  consolidate its market dominance after taking
  another 20 percent from its only Chinese rival,
  Lucky Film Corp ---- 70 market share.

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Monopoly law badly needed in China

• anti-monopoly legislation and revising the
  existing unfair competition law are necessary
  steps to curb anti-competition acts of
  multinational companies.
• Eg Microsoft has been taken to court in an
  attempt to break its monopoly as
• -- competition is regarded as healthy,
  encouraging businesses to be more efficient and
  to produce new ideas and products

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Changing markets--changing factors

• Income
• Time
• Technology
• Tastes

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Changing markets

• A number of factors has a direct effect on
  competition in a market. The most common
  influences causing changes are
• Income
• the general level of income increases
• --more expensive goods and services are bought
• --cease buying cheaper ones
• --the market for the expensive good or service to
  expand
• --the market for the cheaper ones to contract.

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Changing markets

• Time
• Being first into a new market
• -- a huge advantage over its competitors
• (even if their product is protected by patents )
• -- competitors will be along sooner or later.

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Changing markets

• Technology
• New technology replaces old, changing the market
  for both.
• Eg gas lamps were replaced by electric light,
  which meant that all the businesses that produced
  gas lamps, or parts for them, had no market any
  more.
• Bath foam and shampoo to replace soap

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Changing markets

• Tastes
• These change over time they may include
  markets in food, fashion and furniture. Current
  trends in each include healthier eating, tattoos
  and piercing, and leather.
• (e.g. braised pork)

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Competition and profit margin
Competitors information gathering strategies
Competition
Competitor analysis chart
Price and non-price competition
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Competition and profit margin

• The number of firms engaging in producing similar
  products has increasedcosts continue to
  risecompetitors keep prices downa narrowing
  spread between costs and selling priceswhat is
  necessary now for the competitors to maintain or
  increase profit?
• ---- increase business sales volume to maintain
  or increase profit

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Information gathering strategies

• Make direct enquiries
• call the company itself and simply request the
  information
• Visit your local library
• most libraries have reference sections with
  staff trained to assist researchers in complex
  information searches
• Study product literature
• from these , you can see that which product
  they are promoting , the changes theyve
  introduced to existing products
• Track media commentary
• to see what your competitors saying about
  themselves in press release and interviews

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Information gathering strategies

• Use your eyes
• observe what your competitors appear to be
  doing to observe their advertisements to
  observe trends , etc
• Search the internet
• there is a good chance that large competitors
  have a site on the World Wide Web. Scan the
  information they provide on a regular basis.
• Carry out customer research and talk to customers
• Engage the services of a consultant agency

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Competitor analysis chart

• About some product which is produced by different
  companies, the items we have to compare
• -- materials of the product price range
  discounts free estimate individual variations
  delivery time delivery and fitting fee
  after-sales service and guarantee free gifts

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Company A Company B Company C
Materials of products
Price range
discounts
Free estimate
Individual variations
Delivery time
Delivery and fitting fee
After-sales service and guarantee
Free gifts/ market share/ promotion/future plan/etc
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True or false

• All businesses are able to compete by lowering
  prices
• False
• Some businesses cant afford it

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Types of competition

• Price competition
• Non-price competition

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Price competition

• Promotional pricing
• -- a temporary price reduction
• Loss leaders
• -- charges less for an item than it actually cost
  to lead people into buying other items
• Penetration pricing
• -- charge a special low price to break into a new
  market

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Price competition

• Creaming
• -- charge a high price
• Destroyer pricing
• -- set a low price in the hope of driving a
  competitor out of a business.
• (vicious circle)

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Non-price competition

• 1.Adding value eg with special promotions such
  as buy one, get one free or free x with every
  purchase of y
• 2.Offering free gifts or other rewards for
  customer loyalty ( offer through the use of
  loyalty cards)

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Non-price competition

• 3.Providing a better service than a competitor
• 4.Selling a wider range of products than a
  competitor.
• 5.Providing the customer with convenience and
  extra facilities, such as car parks, bag packing
  services, extended opening hours, etc.

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Suggest the type of pricing that would be most
appropriate for the following

• A new portable DVD device
• A new flavor of ice cream
• A new brand of orange juice, where you really
  want to build market share
• To get rid of old stock before the spring
  fashions come in.

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Branding
Valuation of brand
Brand
The difference between product brand and service
brand

Sponsoring and brand names
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True or false

• Patents can protect businesses from competitors
• True
• Patents can protect new technology from being
  copied before the market is opened

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Branding

• Branding one of the main ways in which a
  company tries to make itself different from all
  the other businesses in a market , which offers a
  product an identity.
• (giving the product a trade name)
• Brand image is the image of a companys products
  or services.

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Brand names abroad

• What kind of brand names are acceptable abroad?
• -- short, simple, easily read and pronounced
• -- culture free
• -- legally available

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Valuation of brands

• The worth of the brand depends on the following
• 1.the amount that has spent on introducing and
  developing the brand
• 2.the competition
• 3.trends in consumer fashion
• 4. Consumer loyalty towards the brand
• 5.the number of countries in which the brand can
  be used

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The key difference between a product brand and a
service brand

• -- whether you can comparatively easier control
  the quality that youre getting.
• As service corporation, what should they do?
• -- careful recruitmentcareful training internal
  communication.

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Sponsoring and brand names

• Chinese companies are given greater opportunities
  as China is better positioned to hold significant
  sporting events, as the 2008 Beijing Olympics.
• Lenovo Group became a sponsor of the 2006 Winter
  Games in Turin, Italy and the 2008 Summer Games
  in Beijing.
• Most sponsors will be multinationals with heavy
  China operations and some will be big Chinese
  companies.

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Sponsoring and brand names

• The experienced sponsors will look for indirect
  benefits. They want to promote their brands and
  enhance their images.
• South Koreas Kia Motors took Australia Open
  sponsorship as its top brand marketing strategy,
  and became a global brand associated with youth
  and vitality.
• (The sponsorship boom is just a bubble, some
  sponsors are actually losing money.)

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Sponsoring and brand names

• By sponsoring, target customer bases can be
  increased and customer loyalty can be
  strengthened.
• -- a 10 increase in customer loyalty will
  produce a sales growth of 80.

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Commercials
advertisements
Mailing list
Advertising
Hoarding (billboard)
Junk mail
Point-of-sale advertising
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Ways of promoting products

• Commercial
• a short picture or sound programme on radio,
  television or in a cinema , advertising a product
  or service
• Advertisements
• a public notice usu. Printed in a newspaper ,
  of goods for sale or services offered, or of
  goods and services wanted
• Mailing list
• a list of names and addresses of persons and
  organizations to whom advertising material such
  as notices , leaflets, offers and other sales
  information is regularly sent .

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Ways of promoting products

• Hoarding(UK) billboard (US)
• Junk mail
• consists of advertising matter sent by post
  and unwanted by the person receiving it
• Point-of-sale advertising
• advertising by showcards, displays, posters,
  etc , in retail shops , where the article can be
  bought on the spot

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SMART analysis

• The SMART analysis is a way of making sure that
  objectives were
• -- specific , measurable, achievable, relevant
  and timed .
• The purpose of SMART analysis
• -- to evaluate and improve the objective .

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SMART analysis

• 1.Specific
• an objective should not be too vague
• 2.Measurable
• an objective can be assessed it is
  quantifiable
• 3.achievable
• an objective should be realistically possible
  
• 4. relevant
• an objective should fit the overall aim of
  the company
• 5.timed
• an objective should clearly outline exactly
  when steps will be taken

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Example

• Cadbury Schweppes, the chocolate and soft drinks
  giant, has an overall aim to increase the value
  of the business for shareholders. To achieve this
  aim, it has set itself specific objectives
• Increasing earnings per share by 10 each year.
• Doubling the value of shareholders investment
  every four years.
• Generating 150m of cash every year that can be
  used for projects.
• ( each objective follows the SMART principle.)

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SWOT analysis

• SWOT analysis is used to categorize aspects of an
  organization.
• -- It stands for strengths , weaknesses ,
  opportunities and threats .
• It is used by organizations to
• ----identify areas which may need to be changed ,
  areas which can be developed.

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SWOT analysis

• 1.The internal portions of a SWOT analysis
• --strengths and weaknesses of your specific
  business.
• 2.The external analysis
• --the opportunities presented by the marketplace
• --the threats that you face in your chosen
  market.

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Decide if you think these points describe
strengths, weaknesses, opportunities or threats.

• Fast delivery service.
• The local government plans to build two new
  housing estates in local area.
• Lots of useful design software available on the
  market.
• Central location of showroom.
• Main store needs renovating.
• Not enough promotion- none outside Midlands.
• Product literature isnt attractive enough.
• Complacency among some staff at all levels.
• Aggressive promotion from key competitors.
• Good reputation with current clients.