4

Category Attractiveness Analysis

4-2

Aggregate Category Factors

• Category size

• Category growth

• Stage in product life cycle

• Sales cyclicity

• Seasonality

• Profits

4-3

Attractiveness of Market Variables

4-4

Category Attractiveness over the Product Life Cycle

Stage of product life cycle

Category size

Category growth

Category attractiveness

Introduction

Small

Low

Low

Growth

Moderate

High

High

Maturity

Large

Low

Low/high

Decline

Moderate

Negative

Low

Sales

Time

4-5

Category Factors

• Threat of new entrants

• Bargaining power of buyers

• Bargaining power of suppliers

• Current category rivalry

• Pressure from substitutes

• Category capacity

4-6

Environmental Factors

• Technological

• Political

• Economic

• Regulatory

• Social

4-7

Factors in Assessing

the Structure of Industries

4-8

Factors in Assessing the Structure of Industries

• Threat of new entrants

• Bargaining power of buyers

• Bargaining power of suppliers

• Amount of intracategory rivalry

• Threat of substitute products or services

4-9

Buyer Bargaining Power is High When:

• Product bought is a large percentage of the buyer’s cost.

• Product bought is undifferentiated.

• Buyers earn low profits.

• Buyer threatens to backward integrate.

• Buyer has full information.

• Substitutes exist for the seller’s product or service.

4-10

Supplier Bargaining Power is High When:

• Suppliers are highly concentrated, that is,

dominated by a few firms.

• There is no substitute for the product

supplied.

• Supplier has differentiated its product or

built in switching costs.

• Supply is limited.

4-11

Major Characteristic of Categories Exhibiting Intensive Rivalries

• Many or balanced competitors

• Slow growth

• High fixed costs

• Lack of product differentiation

• Personal rivalries

4-12

Impact of Category Factors on Attractiveness

4-13

Typology of Technical Developments

* Includes agronomic and biomedical developments.

4-14

Conceptualizing Political Risks

4-15

Impact of Category Factors on Attractiveness

4-16

5

Competitor Analysis

4-17

Competitor Analysis System

What are they going to

do?

Differential

competitor

advantage analysis

i.e. Who has the

competitive product

advantage?

Key questions:

- Who are they?

- What are the

competing product

features?

- What do they

want?

- What is their

current strategy?

Primary data Secondary data

4-18

Primary Sources of Competitor Information

Sales Force

Investment

Bankers

Suppliers

Customers

Employees

Consultants/

Specialized

Firms

Primary

Data

4-19

Other Sources of Competitor Information

Trade Shows

Help-Wanted

Advertisements

Plant Tours

Reverse

Engineering

Monitoring

Test Markets

Hiring Key

Employees

Primary

Data

4-20

Product Features Matrix

4-21

Assessing Competitors’ Strategies

• Marketing strategy

• Comparing value chains

• Marketing mix

• Pricing

• Promotion

• Distribution

• Product/Service capabilities

4-22

Value Chain

Service

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Marketin

g and

Sales

Operations

Outbound

Logistics

Inbound

Logistics

Support

Activities

Primary Activities

4-23

Criteria to Assess Technological Strategy

1. Technology selection or specialization

2. Level of competence

3. Sources of capability: internal versus

external

4. R&D investment level

5. Competitive timing: initiate versus respond

6. R&D organization and policies

4-24

Competitor Information to Collect

• Ability to conceive and design

• Ability to produce

• Ability to market

• Ability to finance

• Ability to manage

4-25

Differential Competitor Advantage Analysis

4-26

A Competitive Conjecture Process

Our

total

outcome

Second period

First period

Should we cut price?

4-27

PDA Product Features Matrix

4-28

Comparison of Competitor Resources: PDAs

4-29

Comparison of Competitor Resources: PDAs (cont.)