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Chapter

Understanding Market Opportunities

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Chapter Summary
This Chapter will introduce you to the
following:
The Mobile Telephone Business: Increasing
Competition in a Growing Market
Seven Domains of Attractive Opportunities
Markets and Industries: Whats the Difference?
Macro Trend Analysis
Determining Industry Attractiveness
Porters Five Competitive Forces
Understanding Industries and Markets at the Micro
Level

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Exhibit: 4.1

The Seven Domains of Attractive


Opportunities
Industry Domains

Market Domains
Macro
Level

Micro
Level

Market Attractiveness

Industry Attractiveness

Mission,
Aspirations,
Propensity
for Risk

Ability to
Execute
on CSFs

Team
Domains
Connectedness up,
down and across
Value Chain

Target Segment Benefits


and Attractiveness

Sustainable Advantage

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Difference between Markets and


Industries
A market is a group of individuals
or organisations having the
willingness and ability to buy goods
or services to satisfy a particular
class of wants or needs
An industry is a group of
organisations offering goods or
services that are similar and close
substitutes for one another

Copyright 2009 McGraw-Hill Australia Pty Ltd


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Prepared by Anton Kriz, The University of Newcastle

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Macro Trend Analysis


The macroenvironment can be divided into
six major components:

Demographic
Sociocultural
Economic
Regulatory
Technological
Natural

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Macro Trend Analysis


(continued)
Demographic trends:

Demography is destiny
Ageing population
AIDS and variations in global population growth
Increase in immigration and declining marriage
rates

Sociocultural trends:
Can take a generation or more to have a
significant impact, however, they do exert a
powerful impact
Importance of business ethics
Changes in fitness and nutrition
Copyright 2009 McGraw-Hill Australia Pty Ltd
PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Macro Trend Analysis


(continued)
Economic trends:
Increase or decrease of interest rates
The US economy is not in very good shape, with
the housing market in deep trouble, huge national
debt and a declining dollar (and deep financial
crisis)
Demand from China and India (can it be
sustained?)

Regulatory trends:
In every country, and between certain countries
such as members of the European Unionthere
is regulatory environment
Government deregulation of airlines, trucking,
railroads, telecommunications, and banking
Copyright 2009 McGraw-Hill Australia Pty Ltd
PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Macro Trend Analysis


(continued)
Technological trends:
Technological progress over the next 10 years is
predicted to be several times that experienced in
the past 10 years
Major innovations expected in a variety of fields,
especially biology and
electronics/telecommunications

Physical trends:

Changes in the earths resources and climate


Finite Oil
Global warming
Development of Green Products

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
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Exhibit 4.8

The Major Forces that Determine


Industry Attractiveness
Threat of new
entrants
Bargaining
power
of suppliers

Rivalry among
existing industry

Bargaining
power

firms

of buyers

Threat of substitute

products

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Porters Five Competitive Forces


Rivalry among present competitors
Rivalry is greater under the following conditions:
There is high investment intensity
There are many small firms in an industry or
no dominant firms exist
There is little product differentiation
It is easy for customers to switch from one
sellers products to those of others

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Porters Five Competitive Forces


(continued)
Threat of new entrants
Entry is more difficult under the following
conditions:
When strong economies of scale and
learning effects are present
If the industry has strong capital
requirements at the outset
When strong product differentiation exists
among current players
If gaining distribution is particularly difficult

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PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
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Porters Five Competitive Forces


(continued)
Bargaining power of suppliers
Their power is increased under the following
conditions:
If the cost of switching suppliers is high
If prices of substitutes are high
If suppliers can realistically threaten forward
integration
When the suppliers product is a large part
of the buyers value added

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Porters Five Competitive Forces


(continued)
Bargaining power of buyers:
The extent to which buyers succeed in their
bargaining efforts depends on several factors:
The extent of buyer concentration
Switching costs that reduce the buyers
bargaining power
The threat of backward integration
The products importance to the performance
of the buyers product
Buyer profitability

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Porters Five Competitive Forces


(continued)
Threat of substitute products
Substitutes are alternative product types (not
brands) that perform essentially the same function
Plastic bottles versus aluminium cans
New mobile phone technology versus personal
digital assistants (PDAs)

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Information Sources for MacroLevel Analyses

Trade associations
Trade magazines
State/Territory/Federal governments
General business and popular press
The Internet
Statistics Office

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Understanding Markets at the


Micro Level
Opportunities are attractive when market
offering meets most/all of the following
tests:
There is a clearly identified source of customer
need, for some clearly identifiable set of target
customers, which the product offering satisfies
The offering provides customer benefits that
other product solutions do not
The target market segment is likely to grow
There are other segments that the currently
targeted product may be able to penetrate

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Understanding Industries at the


Micro Level
Opportunities are attractive when the
company itself meets most/all of the
following tests:
It possesses something proprietary that other
companies cannot easily duplicate or imitate
The business has or can develop superior
organisational processes, capabilities, or
resources that others find difficult to imitate or
duplicate
The companys business model is economically
viable

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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The Team Domains


Opportunities are only as good as the
marketing and other businesspeople who
will pursue them
Crucial questions:
Does the opportunity fit what we want to do
(mission, aspirations and objectives)?
Do we have the right resources and
organisational competences?
Do we have the right connections and business
networks?

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Anticipating and Responding to


Environmental Change
Impact and timing of event
Many environmental events that could have an
impact on the firm can be detected
Management systems can be implemented to
help respond to such changes in environmental
conditions (Opportunity/Threat Matrix)

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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Exhibit 4.15

Opportunity/Threat Matrix for a


Telecommunication Company in Aust.
Probability that PLESCTE factor
will change by 2015
Selected PLESCTE
Factors Level of
Impact
on Company*

High

Low

High

4 and 5

Low

Selected PLESCTE Factors (political, legal, economic, sociocultural, technological


environmental)
1. Wireless communication technology will make networks based on fibre and copper
wires redundant.
2. New technology will provide for the storage and accessing of vast quantities of data at
affordable costs.
3. Prices of large-screen (over 90 cm) digital TVs will reach mass-market prices.
4. Cheap and individually customised internet telephony will emerge
5. The price of mobile phones will be reduced and mobiles used like handheld computers

Copyright 2009 McGraw-Hill Australia Pty Ltd


PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker
Prepared by Anton Kriz, The University of Newcastle

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