Intersection Marketing

Business Strengths + Insights from Market Intelligence = Customer-Compelling Values.

<h2><a href="http://johniduh.yolasite.com/breakthrough-marketing/eating-and-drinking-on-the-go-trends-led-beverage-manufacturers-introducing-plastic-and-cans-beverages-such-as-plastic-coke-lacasera-teems-eat-can-malt-can-juice-eat-" title="Eating-and-Drinking-on-the-go trends led beverage manufacturers introducing Plastic and Cans Beverages, such as plastic: Coke, Lacasera, Teems, eat, Can-malt, can-Juice eat.">Eating-and-Drinking-on-the-go trends led beverage manufacturers introducing Plastic and Can Beverages, such as plastic: Coke, Lacasera, Teems, Can-malt, Can-Juice eat</a>, etc</h2>

Eating-and-Drinking-on-the-go trends led beverage manufacturers introducing Plastic and Can Beverages, such as plastic: Coke, Lacasera, Teems, Can-malt, Can-Juice eat, etc

Posted 185 weeks ago
<h2><a href="http://johniduh.yolasite.com/breakthrough-marketing/trends-in-healthy-living-through-immune-boosting-led-alliance-in-motion-global-developed-c24-7" title="Trends in healthy living through immune boosting led Alliance in Motion Global developed:  C24/7">Trends in healthy living through immune boosting led Alliance in Motion Global developed: C24/7</a>.</h2>
<p><small><span>C24/7 Natura-Ceuticals contains the most number of anti-oxidants with approximately 22,000 phytonutrients in one product. The ingredients of C24/7 work in “synergy” to produce the maximum result for your body, making it the most potent anti-aging product in the history of supplementation.</span></small></p>
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<p><span>C24/7 is the new breakthrough in food supplements; a unique and patented formulation that delivers the highest amount of anti-oxidants and phyto-nutrients.<br/><br/>C24/7 is packed with benefits for different needs, from controlling blood sugar and cholesterol, to healthy blood circulation and sexual vitality.</span><span></span></p>

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Trends in healthy living through immune boosting led Alliance in Motion Global developed: C24/7.

C24/7 Natura-Ceuticals contains the most number of anti-oxidants with approximately 22,000 phytonutrients in one product. The ingredients of C24/7 work in “synergy” to produce the maximum result for your body, making it the most potent anti-aging product in the history of supplementation.

C24/7 is the new breakthrough in food supplements; a unique and patented formulation that delivers the highest amount of anti-oxidants and phyto-nutrients.

C24/7 is packed with benefits for different needs, from controlling blood sugar and cholesterol, to healthy blood circulation and sexual vitality.

Posted 185 weeks ago
<h2><a href="http://johniduh.yolasite.com/breakthrough-marketing/dual-trend-in-the-in-hot-drinks-and-the-use-of-herbs-led-kasapreko-a-ghanaian-based-alcoholic-manufacturer-introduces-alomo-bitters-" title="Dual-trend in the in Hot-Drinks and the use of herbs led KASAPREKO, a Ghanaian based alcoholic manufacturer introduces Alomo Bitters.">Dual-trend in the in Hot-Drinks and the use of herbs led KASAPREKO, a Ghanaian based alcoholic manufacturer introduces Alomo Bitters.</a></h2>
<p><small><strong>Alomo Bitters</strong><span class="apple-converted-space"> </span><span>is a herbal alcoholic product made</span><span> </span><span>from carefully chosen tropical plant extracts and</span><span> </span><span>very well known for its proven medicinal values.</span><span> </span><span>It has its roots in the traditional herbal industry</span><span> </span><span>that is meticulously researched by the Centre for</span><span> </span><span>Scientific Research into Plant Medicine a World</span><span> </span><span>Health Organization affiliate, based at Mampong</span><span> </span><span>Akuapem in the Eastern region of Ghana.</span></small></p>
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<p><span class="yui-tag-span yui-tag"><span class="yui-tag-span yui-tag"><strong><br/>Alomo Bitters</strong><span class="apple-converted-space"> </span><span>– A herbal based drink, is not just any ordinary alcoholic drink. With its origins from Ghana, Alomo Bitters is made from carefully selected tropical plant extracts which forms part of a secret recipe. It’s popular for its aphrodisiac qualities.</span></span><span><br/></span></span></p>
<p><span class="yui-tag-span yui-tag">To quote a recent article by Euromonitor -<span class="apple-converted-space"> </span><em>“Africa brings one of the most surprising alcohol growth stories in recent times. Distilled in Ghana, sales of Alomo Bitters in neighboring Nigeria have skyrocketed over the last few years. What’s behind the jump? The drink is said to hold aphrodisiac qualities for men and women. Nigerians mix the beverage with non-alcoholic beer – sales of that have soared in the country too. Plans to export the drink to more countries on the continent are said to be afoot. -</em><span class="apple-converted-space"></span><strong><em>Euromonitor’s</em></strong><span class="apple-converted-space"></span><em>Malandrankis says the supposed sexual enhancing properties “hit all the right buttons in Nigeria.” Watch out for it on local shelves soon.”</em><span></span></span></p>

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<p><span class="yui-tag-span yui-tag">Packaged in a<span class="apple-converted-space"> </span><strong>200ml PET, 30ml Sachet</strong><span class="apple-converted-space"> </span>and<span class="apple-converted-space"> </span><strong>750ml Glass</strong><span class="apple-converted-space"> </span>bottle Alomo Bitters is developed in conjunction with the Center for Scientific Research into Plant Medicine in Ghana, an affiliate of the World Health Organization,<span class="apple-converted-space"> </span><strong>Alomo Bitters contains natural components/ingredients which promote/stimulate/enhances vitality and general well being.</strong><span></span></span></p>

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<p><span class="yui-tag-span yui-tag">Alomo Bitters is also c<strong>leanses bowel and relieves body pain, helps ease menstrual pains/cramps in women and contains anti malaria properties</strong><span></span></span></p>

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<p><span class="yui-tag-span yui-tag">Alomo Bitters is enjoyed all over the world, it’s vitalizing and best enjoyed straight or mixed with your favorite juice or soda.<span></span></span></p>

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<p><span class="yui-tag-span yui-tag">In 2012 Alomo Bitters was awarded a Super Brand. It has also been identified to be amongst the top 5 emerging brands in the world by CNN money.<span></span></span></p>

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<p><a href="http://money.cnn.com/gallery/news/companies/2013/10/08/exotic-drinks/6.html"><strong><span class="yui-tag-span yui-tag"><a href="http://money.cnn.com/gallery/news/companies/2013/10/08/exotic-drinks/6.html">http://money.cnn.com/gallery/news/companies/2013/10/08/exotic-drinks/6.html</a></span></strong></a></p>
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Dual-trend in the in Hot-Drinks and the use of herbs led KASAPREKO, a Ghanaian based alcoholic manufacturer introduces Alomo Bitters.

Alomo Bitters is a herbal alcoholic product made from carefully chosen tropical plant extracts and very well known for its proven medicinal values. It has its roots in the traditional herbal industry that is meticulously researched by the Centre for Scientific Research into Plant Medicine a World Health Organization affiliate, based at Mampong Akuapem in the Eastern region of Ghana.


Alomo Bitters
 – A herbal based drink, is not just any ordinary alcoholic drink. With its origins from Ghana, Alomo Bitters is made from carefully selected tropical plant extracts which forms part of a secret recipe. It’s popular for its aphrodisiac qualities.

To quote a recent article by Euromonitor - “Africa brings one of the most surprising alcohol growth stories in recent times. Distilled in Ghana, sales of Alomo Bitters in neighboring Nigeria have skyrocketed over the last few years. What’s behind the jump? The drink is said to hold aphrodisiac qualities for men and women. Nigerians mix the beverage with non-alcoholic beer – sales of that have soared in the country too. Plans to export the drink to more countries on the continent are said to be afoot. -Euromonitor’sMalandrankis says the supposed sexual enhancing properties “hit all the right buttons in Nigeria.” Watch out for it on local shelves soon.”

Packaged in a 200ml PET, 30ml Sachet and 750ml Glass bottle Alomo Bitters is developed in conjunction with the Center for Scientific Research into Plant Medicine in Ghana, an affiliate of the World Health Organization, Alomo Bitters contains natural components/ingredients which promote/stimulate/enhances vitality and general well being.

Alomo Bitters is also cleanses bowel and relieves body pain, helps ease menstrual pains/cramps in women and contains anti malaria properties

Alomo Bitters is enjoyed all over the world, it’s vitalizing and best enjoyed straight or mixed with your favorite juice or soda.

In 2012 Alomo Bitters was awarded a Super Brand. It has also been identified to be amongst the top 5 emerging brands in the world by CNN money.

http://money.cnn.com/gallery/news/companies/2013/10/08/exotic-drinks/6.html

Posted 185 weeks ago
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<h2><a href="http://johniduh.yolasite.com/gurus-on-marketing/chinalife-introduced-%E2%80%9Cultra-slim-tea%E2%80%9D-kinetizing-" title="Chinalife Introduced “Ultra Slim Tea” - Kinetizing!">Chinalife Introduced “Ultra Slim Tea” - Kinetizing!</a></h2>
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<p class="MsoNormal"><span></span><strong>Chinalife,</strong> born in 2007,  felt that the concept of natural healthy living with herbs and tea had, for far too long, been thrown together with images of perfectly pure people restricting themselves from indulgence. </p>
<p class="MsoNormal"><span>With such reason in mind, <strong>Chinalife</strong> introduced </span><strong>Ultra Slim Tea, </strong><span>a high grade herbal tea traditionally used to help reduce weight & regulate blood fat levels - an effective and natural way to lose weight. </span><strong>Ultra Slim Tea</strong><span> can be infused up to 3 times simply by adding fresh water. Ultra Slim Tea defines a  market space, Kinetizing!</span></p>

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Chinalife, born in 2007,  felt that the concept of natural healthy living with herbs and tea had, for far too long, been thrown together with images of perfectly pure people restricting themselves from indulgence. 

With such reason in mind, Chinalife introduced Ultra Slim Tea, a high grade herbal tea traditionally used to help reduce weight & regulate blood fat levels - an effective and natural way to lose weight. Ultra Slim Tea can be infused up to 3 times simply by adding fresh water. Ultra Slim Tea defines a  market space, Kinetizing!

 

Posted 186 weeks ago
<h2><a href="http://johniduh.yolasite.com/gurus-on-marketing/historical-flashback-create-a-business-space-in-the-newspaper-industry" title="Historical Flashback create a Business space in the Newspaper Industry">Historical Flashback creates a Business space in the Newspaper Industry</a></h2>
<p><span>The desire to document Nigeria’s historical past events has led to the emergence of a newspaper called <strong>Historical Flashback.</strong> The newspaper  serves as the reservoir of information about Nigeria’s past from the pre colonial period, publishing past historical stories in a refreshed manner for documentation purpose. Many things happened in the country  and they continue to happen because many people did not know what happened in the past. </span><strong>Historical Flashback</strong><span> is the first of its kind in the newspaper industry. </span><strong>Historical Flashback</strong><span> is in the market to fill the gap of documentation. The documentation of the past and materials about Nigeria’s past events that cannot be found anywhere. “If you pick the newspaper you can read about events of 100 years ago, stories of past events before and after the country’s independence. The publishers are researching on the past stories in the country so that they can be freshly presented for those who have anything to do with Nigeria. It’s not just newspaper, its historical, as well as documented information. </span></p>

Historical Flashback creates a Business space in the Newspaper Industry

The desire to document Nigeria’s historical past events has led to the emergence of a newspaper called Historical Flashback. The newspaper  serves as the reservoir of information about Nigeria’s past from the pre colonial period, publishing past historical stories in a refreshed manner for documentation purpose. Many things happened in the country  and they continue to happen because many people did not know what happened in the past. Historical Flashback is the first of its kind in the newspaper industry. Historical Flashback is in the market to fill the gap of documentation. The documentation of the past and materials about Nigeria’s past events that cannot be found anywhere. “If you pick the newspaper you can read about events of 100 years ago, stories of past events before and after the country’s independence. The publishers are researching on the past stories in the country so that they can be freshly presented for those who have anything to do with Nigeria. It’s not just newspaper, its historical, as well as documented information. 

Posted 186 weeks ago
<h2><a href="http://johniduh.yolasite.com/gurus-on-marketing/kinetizing-marketing-has-the-ability-to-drive-successes-consider-the-introduction-of-energy-bars-whose-market-was-fragmented-by-definition-targeting-at-different-demograp" title="Kinetizing Marketing has the ability to drive successes. Consider the introduction of energy bars, whose market was fragmented by  definition targeting at different demographics.">Kinetizing Marketing has the ability to drive successes. Consider the introduction of energy bars, whose market was fragmented by definition targeting at different demographics.</a></h2>
<p><strong><span> </span></strong><strong><span>Energy bars</span></strong><span> are supplemental bars containing </span><span><a href="http://en.wikipedia.org/wiki/Cereal" title="Cereal"><span>cereals</span></a></span><span> and other high energy foods targeted at people that require quick energy but do not have time for a meal. They are different from </span><span><a href="http://en.wikipedia.org/wiki/Energy_drink" title="Energy drink"><span>energy drinks</span></a></span><span>, which contain </span><span><a href="http://en.wikipedia.org/wiki/Caffeine" title="Caffeine"><span>caffeine</span></a></span><span>, whereas bars provide </span><span><a href="http://en.wikipedia.org/wiki/Food_energy" title="Food energy"><span>food energy</span></a>. </span><span>Holland & Barrett stock a wide range of energy bars that combine </span><a href="http://www.hollandandbarrett.com/pages/categories.asp?cid=5"><span>sports nutrition</span></a><span> with great tasting confectionary. Customer favourite Powerbar, offer a wide choice of tasty energy bars that are a great source of </span><strong>protein</strong><span> and long lasting energy. Trek bars also come in a range of delicious forms, including protein packed flapjacks and virtually fat free brownies.</span>However, there are Energy bars for women, for children, for sports people; even protein bar, Nutrition bar, Honey bar etc.</p>

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Kinetizing Marketing has the ability to drive successes. Consider the introduction of energy bars, whose market was fragmented by definition targeting at different demographics.

 Energy bars are supplemental bars containing cereals and other high energy foods targeted at people that require quick energy but do not have time for a meal. They are different from energy drinks, which contain caffeine, whereas bars provide food energyHolland & Barrett stock a wide range of energy bars that combine sports nutrition with great tasting confectionary. Customer favourite Powerbar, offer a wide choice of tasty energy bars that are a great source of protein and long lasting energy. Trek bars also come in a range of delicious forms, including protein packed flapjacks and virtually fat free brownies.However, there are Energy bars for women, for children, for sports people; even protein bar, Nutrition bar, Honey bar etc.

 

Posted 186 weeks ago
<p class="MsoNormal"><strong><span>Revlon: An ultimate Kinetizing Marketer, smart at Category innovation. Consider  the innovation of  @Colorstay Lipstick!“</span></strong></p>

<p class="MsoNormal"><span>Revlon is a global color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant / deodorants and beauty care products company whose vision is<span class="apple-converted-space"> </span></span><span class="corporatebold"><strong>Glamour, Excitement and Innovation through High-quality Products at Affordable Prices</strong></span>. <span>The company began its success with <strong>opaque long-lasting nail enamel</strong> sold to beauty salons. Revlon sold its nail enamel through department stores and selected drugstores. llicitudin.</span> <span>Revlon® is one of the strongest consumer brand franchises in the world. Revlon’s global brand portfolio includes Revlon® color cosmetics, Almay® color cosmetics, SinfulColors® color cosmetics, Pure Ice® color cosmetics, Revlon ColorSilk® hair color, Revlon® beauty tools, Charlie® fragrances, Mitchum® anti-perspirant / deodorants, and Ultima II® and Gatineau® skincare and its products are sold in over 100 countries across six continents. Websites featuring current product and promotional information can be reached at<span class="apple-converted-space"> </span></span><span><a href="http://www.revlon.com/" target="_blank"><span><a href="http://www.revlon.com">www.revlon.com</a></span></a></span><span>,</span><span></span></p>

Revlon: An ultimate Kinetizing Marketer, smart at Category innovation. Consider  the innovation of  @Colorstay Lipstick!“

Revlon is a global color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant / deodorants and beauty care products company whose vision is Glamour, Excitement and Innovation through High-quality Products at Affordable Prices. The company began its success with opaque long-lasting nail enamel sold to beauty salons. Revlon sold its nail enamel through department stores and selected drugstores. llicitudin. Revlon® is one of the strongest consumer brand franchises in the world. Revlon’s global brand portfolio includes Revlon® color cosmetics, Almay® color cosmetics, SinfulColors® color cosmetics, Pure Ice® color cosmetics, Revlon ColorSilk® hair color, Revlon® beauty tools, Charlie® fragrances, Mitchum® anti-perspirant / deodorants, and Ultima II® and Gatineau® skincare and its products are sold in over 100 countries across six continents. Websites featuring current product and promotional information can be reached at www.revlon.com,

Posted 186 weeks ago
<h2><a href="http://johniduh.yolasite.com/gurus/starbucks%E2%80%98-howard-schultz-is-one-of-my-nominees-for-kinetizing-strategy" title="Starbucks‘ HOWARD SCHULTZ is one of my nominees for kinetizing strategy" target="_self">Starbucks‘ HOWARD SCHULTZ is one of my nominees for kinetizing </a>Initiatives</h2>
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<div><span class="userContent">When HOWARD SCHULTZ, starbucks ceo till year 2000,came to the company in 1982, he recognized an unfilled niche for “cafes serving gourmet coffee directly to customers“. This strategic initiative helps starbucks achieve loyal customer base in Seatle. In the next growth phase, it applied the same successful formular that had worked wo<span class="text_exposed_show">nders in seattle, first in other cities in the pacific Northwest, then through out North America, and finally, across the globe. Once starbucks had established itself as a presence in thousands of cities internationally, it sought to increase the number of purchases by existing customers with “kinetizing strategy“ that led to new in-store merchandise including compilation CDs, Starbucks Duetto Visa Cards that allows customer to recieve points towards starbucks‘ purchases when they use it; and high-speed internet wireless access at thousands of starbucks‘ HOTSPOTS through a deal with T-MOBILE. Finally, starbucks kinetized into grocery store aisles with Frappucino bottled drinks, starbucks‘ self-branded ice-cream, and the purchase of a tea retailer, Tazor Tea!</span></span></div>
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Starbucks‘ HOWARD SCHULTZ is one of my nominees for kinetizing Initiatives

When HOWARD SCHULTZ, starbucks ceo till year 2000,came to the company in 1982, he recognized an unfilled niche for “cafes serving gourmet coffee directly to customers“. This strategic initiative helps starbucks achieve loyal customer base in Seatle. In the next growth phase, it applied the same successful formular that had worked wonders in seattle, first in other cities in the pacific Northwest, then through out North America, and finally, across the globe. Once starbucks had established itself as a presence in thousands of cities internationally, it sought to increase the number of purchases by existing customers with “kinetizing strategy“ that led to new in-store merchandise including compilation CDs, Starbucks Duetto Visa Cards that allows customer to recieve points towards starbucks‘ purchases when they use it; and high-speed internet wireless access at thousands of starbucks‘ HOTSPOTS through a deal with T-MOBILE. Finally, starbucks kinetized into grocery store aisles with Frappucino bottled drinks, starbucks‘ self-branded ice-cream, and the purchase of a tea retailer, Tazor Tea!
Posted 186 weeks ago
<h2><a href="http://johniduh.yolasite.com/blog/ford-repositioned-existing-products-services-resulting-in-an-original-category-" title="Ford Used Kinetizing Model Repositioned Existing Products/Services Resulting in an Original Category." target="_self">Ford Repositioned Existing Products/Services Resulting in an Original Category.</a></h2>
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<p><span>In the United Kingdom, Ford positioned its Galaxy Minivan in relation to First-Class Air Travel comfortable enough to be suitable for busy executives. By highlighting attributes far different from those that would appeal to buyers looking for a family vehicle, the automaker used a classic Kinetizng approach created a Minivan subcategory.</span></p>
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Ford Repositioned Existing Products/Services Resulting in an Original Category.

In the United Kingdom, Ford positioned its Galaxy Minivan in relation to First-Class Air Travel comfortable enough to be suitable for busy executives. By highlighting attributes far different from those that would appeal to buyers looking for a family vehicle, the automaker used a classic Kinetizng approach created a Minivan subcategory.

Posted 186 weeks ago
<h2><a href="http://johniduh.yolasite.com/blog/royal-philips-used-market-insight-to-kinetize-attuned-to-consumer-tech-trend" title="ROYAL PHILIPS Leverage Market Insight Plus Consumer Electronics-Trend to Kinetize" target="_self">ROYAL PHILIPS Used Insights from Consumer Electronics-Trends, Kinetiz</a>ing</h2>
<p><span class="usercontent"><span>Philips researchers asked 1,650 consumers and 180 customers in dozens of in-depth and qualitative interviews and focus groups on what was most important to them in using technology. Respondents from the Uk, U.S, France, Germany, The Netherlands, Hong Kong, China and Brazil agreed on one theing: they wanted the benefits of tech</span></span><span class="textexposedshow"><span>nology without the hassles. With these, Philips crafted “Sense and Simplicity” campaign with the believe that their brands plus innovation will reflect simplicity – the major of mordern technology. To achieve its plans, Philips tirlessly integrate media: the campaign consists of prints, Online, Television advertisement showcasing perspectives on the journey to simplicity, resonating with consumers. It just make sense!</span></span></p>

ROYAL PHILIPS Used Insights from Consumer Electronics-Trends, Kinetizing

Philips researchers asked 1,650 consumers and 180 customers in dozens of in-depth and qualitative interviews and focus groups on what was most important to them in using technology. Respondents from the Uk, U.S, France, Germany, The Netherlands, Hong Kong, China and Brazil agreed on one theing: they wanted the benefits of technology without the hassles. With these, Philips crafted “Sense and Simplicity” campaign with the believe that their brands plus innovation will reflect simplicity – the major of mordern technology. To achieve its plans, Philips tirlessly integrate media: the campaign consists of prints, Online, Television advertisement showcasing perspectives on the journey to simplicity, resonating with consumers. It just make sense!

Posted 186 weeks ago

Porter's Five Forces A MODEL FOR INDUSTRY ANALYSIS

Posted by JOHN on Friday, April 12, 2013 Under: Business Principles That Work

The model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure.

Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.

Diagram of Porter's 5 Forces

  SUPPLIER POWER
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry
 
THREAT OF
NEW ENTRANTS

Barriers to Entry
Absolute cost advantages
Proprietary learning curve
Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to distribution
Expected retaliation
Proprietary products
RIVALRY THREAT OF
SUBSTITUTES

-Switching costs
-Buyer inclination to
 substitute
-Price-performance
 trade-off of substitutes
  BUYER POWER
Bargaining leverage
Buyer volume
Buyer information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Buyer concentration vs. industry
Substitutes available
Buyers' incentives
DEGREE OF RIVALRY
-Exit barriers
-Industry concentration
-Fixed costs/Value added
-Industry growth
-Intermittent overcapacity
-Product differences
-Switching costs
-Brand identity
-Diversity of rivals
-Corporate stakes

 I. Rivalry

In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences.

Economists measure rivalry by indicators of  industry concentration. The Concentration Ratio (CR) is one such measure. The Bureau of Census periodically reports the CR for major Standard Industrial Classifications (SIC's). The CR indicates the percent of market share held by the four largest firms (CR's for the largest 8, 25, and 50 firms in an industry also are available). A high concentration ratio indicates that a high concentration of market share is held by the largest firms - the industry is concentrated. With only a few firms holding a large market share, the competitive landscape is less competitive (closer to a monopoly). A low concentration ratio indicates that the industry is characterized by many rivals, none of which has a significant market share. These fragmented markets are said to be competitive. The concentration ratio is not the only available measure; the trend is to define industries in terms that convey more information than distribution of market share.

If rivalry among firms in an industry is low, the industry is considered to be disciplined. This discipline may result from the industry's history of competition, the role of a leading firm, or informal compliance with a generally understood code of conduct. Explicit collusion generally is illegal and not an option; in low-rivalry industries competitive moves must be constrained informally. However, a maverick firm seeking a competitive advantage can displace the otherwise disciplined market.

When a rival acts in a way that elicits a counter-response by other firms, rivalry intensifies. The intensity of rivalry commonly is referred to as being cutthroat, intense, moderate, or weak, based on the firms' aggressiveness in attempting to gain an advantage.

In pursuing an advantage over its rivals, a firm can choose from several competitive moves:

  • Changing prices - raising or lowering prices to gain a temporary advantage.

  • Improving product differentiation - improving features, implementing innovations in the manufacturing process and in the product itself.

  • Creatively using channels of distribution - using vertical integration or using a distribution channel that is novel to the industry. For example, with high-end jewelry stores reluctant to carry its watches, Timex moved into drugstores and other non-traditional outlets and cornered the low to mid-price watch market.

  • Exploiting relationships with suppliers - for example, from the 1950's to the 1970's Sears, Roebuck and Co. dominated the retail household appliance market. Sears set high quality standards and required suppliers to meet its demands for product specifications and price.

The intensity of rivalry is influenced by the following industry characteristics:

  1. A larger number of firms increases rivalry because more firms must compete for the same customers and resources. The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership.

  2. Slow market growth causes firms to fight for market share. In a growing market, firms are able to improve revenues simply because of the expanding market.

  3. High fixed costs result in an economy of scale effect that increases rivalry. When total costs are mostly fixed costs, the firm must produce near capacity to attain the lowest unit costs. Since the firm must sell this large quantity of product, high levels of production lead to a fight for market share and results in increased rivalry.

  4. High storage costs or highly perishable products cause a producer to sell goods as soon as possible. If other producers are attempting to unload at the same time, competition for customers intensifies.

  5. Low switching costs increases rivalry. When a customer can freely switch from one product to another there is a greater struggle to capture customers.

  6. Low levels of product differentiation is associated with higher levels of rivalry. Brand identification, on the other hand, tends to constrain rivalry.

  7. Strategic stakes are high when a firm is losing market position or has potential for great gains. This intensifies rivalry.

  8. High exit barriers place a high cost on abandoning the product. The firm must compete. High exit barriers cause a firm to remain in an industry, even when the venture is not profitable. A common exit barrier is asset specificity. When the plant and equipment required for manufacturing a product is highly specialized, these assets cannot easily be sold to other buyers in another industry. Litton Industries' acquisition of Ingalls Shipbuilding facilities illustrates this concept. Litton was successful in the 1960's with its contracts to build Navy ships. But when the Vietnam war ended, defense spending declined and Litton saw a sudden decline in its earnings. As the firm restructured, divesting from the shipbuilding plant was not feasible since such a large and highly specialized investment could not be sold easily, and Litton was forced to stay in a declining shipbuilding market.

  9. A diversity of rivals with different cultures, histories, and philosophies make an industry unstable. There is greater possibility for mavericks and for misjudging rival's moves. Rivalry is volatile and can be intense. The hospital industry, for example, is populated by hospitals that historically are community or charitable institutions, by hospitals that are associated with religious organizations or universities, and by hospitals that are for-profit enterprises. This mix of philosophies about mission has lead occasionally to fierce local struggles by hospitals over who will get expensive diagnostic and therapeutic services. At other times, local hospitals are highly cooperative with one another on issues such as community disaster planning.

  10. Industry Shakeout. A growing market and the potential for high profits induces new firms to enter a market and incumbent firms to increase production. A point is reached where the industry becomes crowded with competitors, and demand cannot support the new entrants and the resulting increased supply. The industry may become crowded if its growth rate slows and the market becomes saturated, creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company failures.

    BCG founder Bruce Henderson generalized this observation as the Rule of Three and Four: a stable market will not have more than three significant competitors, and the largest competitor will have no more than four times the market share of the smallest. If this rule is true, it implies that:

    • If there is a larger number of competitors, a shakeout is inevitable
    • Surviving rivals will have to grow faster than the market
    • Eventual losers will have a negative cash flow if they attempt to grow
    • All except the two largest rivals will be losers
    • The definition of what constitutes the "market" is strategically important.

    Whatever the merits of this rule for stable markets, it is clear that market stability and changes in supply and demand affect rivalry. Cyclical demand tends to create cutthroat competition. This is true in the disposable diaper industry in which demand fluctuates with birth rates, and in the greeting card industry in which there are more predictable business cycles.


II. Threat Of Substitutes

In Porter's model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a product's demand is affected by the price change of a substitute product. A product's price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices.

The competition engendered by a Threat of Substitute comes from products outside the industry. The price of aluminum beverage cans is constrained by the price of glass bottles, steel cans, and plastic containers. These containers are substitutes, yet they are not rivals in the aluminum can industry. To the manufacturer of automobile tires, tire retreads are a substitute. Today, new tires are not so expensive that car owners give much consideration to retreading old tires. But in the trucking industry new tires are expensive and tires must be replaced often. In the truck tire market, retreading remains a viable substitute industry. In the disposable diaper industry, cloth diapers are a substitute and their prices constrain the price of disposables.

While the threat of substitutes typically impacts an industry through price competition, there can be other concerns in assessing the threat of substitutes. Consider the substitutability of different types of TV transmission: local station transmission to home TV antennas via the airways versus transmission via cable, satellite, and telephone lines. The new technologies available and the changing structure of the entertainment media are contributing to competition among these substitute means of connecting the home to entertainment. Except in remote areas it is unlikely that cable TV could compete with free TV from an aerial without the greater diversity of entertainment that it affords the customer.


III. Buyer Power

The power of buyers is the impact that customers have on a producing industry. In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monopsony - a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few pure monopsonies exist, but frequently there is some asymmetry between a producing industry and buyers. The following tables outline some factors that determine buyer power.

Buyers are Powerful if: Example
Buyers are concentrated - there are a few buyers with significant market share DOD purchases from defense contractors
Buyers purchase a significant proportion of output - distribution of purchases or if the product is standardized Circuit City and Sears' large retail market provides power over appliance manufacturers
Buyers possess a credible backward integration threat - can threaten to buy producing firm or rival Large auto manufacturers' purchases of tires
 
Buyers are Weak if: Example
Producers threaten forward integration - producer can take over own distribution/retailing Movie-producing companies have integrated forward to acquire theaters
Significant buyer switching costs - products not standardized and buyer cannot easily switch to another product IBM's 360 system strategy in the 1960's
Buyers are fragmented (many, different) - no buyer has any particular influence on product or price Most consumer products
Producers supply critical portions of buyers' input - distribution of purchases Intel's relationship with PC manufacturers



IV. Supplier Power

A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry's profits. The following tables outline some factors that determine supplier power.


Suppliers are Powerful if: Example
Credible forward integration threat by suppliers Baxter International, manufacturer of hospital supplies, acquired American Hospital Supply, a distributor
Suppliers concentrated Drug industry's relationship to hospitals
Significant cost to switch suppliers Microsoft's relationship with PC manufacturers
Customers Powerful  Boycott of grocery stores selling non-union picked grapes
 
Suppliers are Weak if: Example
Many competitive suppliers - product is standardized Tire industry relationship to automobile manufacturers
Purchase commodity products Grocery store brand label products
Credible backward integration threat by purchasers Timber producers relationship to paper companies
Concentrated purchasers Garment industry relationship to major department stores
Customers Weak Travel agents' relationship to airlines



V. Threat of New Entrants and Entry Barriers

It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firms may enter the industry also affects competition. In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry.

Barriers to entry are more than the normal equilibrium adjustments that markets typically make. For example, when industry profits increase, we would expect additional firms to enter the market to take advantage of the high profit levels, over time driving down profits for all firms in the industry. When profits decrease, we would expect some firms to exit the market thus restoring a market equilibrium. Falling prices, or the expectation that future prices will fall, deters rivals from entering a market. Firms also may be reluctant to enter markets that are extremely uncertain, especially if entering involves expensive start-up costs. These are normal accommodations to market conditions. But if firms individually (collective action would be illegal collusion) keep prices artificially low as a strategy to prevent potential entrants from entering the market, such entry-deterring pricing establishes a barrier.

Barriers to entry are unique industry characteristics that define the industry. Barriers reduce the rate of entry of new firms, thus maintaining a level of profits for those already in the industry. From a strategic perspective, barriers can be created or exploited to enhance a firm's competitive advantage. Barriers to entry arise from several sources:

  1. Government creates barriers. Although the principal role of the government in a market is to preserve competition through anti-trust actions, government also restricts competition through the granting of monopolies and through regulation. Industries such as utilities are considered natural monopolies because it has been more efficient to have one electric company provide power to a locality than to permit many electric companies to compete in a local market. To restrain utilities from exploiting this advantage, government permits a monopoly, but regulates the industry. Illustrative of this kind of barrier to entry is the local cable company. The franchise to a cable provider may be granted by competitive bidding, but once the franchise is awarded by a community a monopoly is created. Local governments were not effective in monitoring price gouging by cable operators, so the federal government has enacted legislation to review and restrict prices.

    The regulatory authority of the government in restricting competition is historically evident in the banking industry. Until the 1970's, the markets that banks could enter were limited by state governments. As a result, most banks were local commercial and retail banking facilities. Banks competed through strategies that emphasized simple marketing devices such as awarding toasters to new customers for opening a checking account. When banks were deregulated, banks were permitted to cross state boundaries and expand their markets. Deregulation of banks intensified rivalry and created uncertainty for banks as they attempted to maintain market share. In the late 1970's, the strategy of banks shifted from simple marketing tactics to mergers and geographic expansion as rivals attempted to expand markets.

  2. Patents and proprietary knowledge serve to restrict entry into an industry. Ideas and knowledge that provide competitive advantages are treated as private property when patented, preventing others from using the knowledge and thus creating a barrier to entry. Edwin Land introduced the Polaroid camera in 1947 and held a monopoly in the instant photography industry. In 1975, Kodak attempted to enter the instant camera market and sold a comparable camera. Polaroid sued for patent infringement and won, keeping Kodak out of the instant camera industry.

  3. Asset specificity inhibits entry into an industry. Asset specificity is the extent to which the firm's assets can be utilized to produce a different product. When an industry requires highly specialized technology or plants and equipment, potential entrants are reluctant to commit to acquiring specialized assets that cannot be sold or converted into other uses if the venture fails. Asset specificity provides a barrier to entry for two reasons: First, when firms already hold specialized assets they fiercely resist efforts by others from taking their market share. New entrants can anticipate aggressive rivalry. For example, Kodak had much capital invested in its photographic equipment business and aggressively resisted efforts by Fuji to intrude in its market. These assets are both large and industry specific. The second reason is that potential entrants are reluctant to make investments in highly specialized assets.

  4. Organizational (Internal) Economies of Scale. The most cost efficient level of production is termed Minimum Efficient Scale (MES). This is the point at which unit costs for production are at minimum - i.e., the most cost efficient level of production. If MES for firms in an industry is known, then we can determine the amount of market share necessary for low cost entry or cost parity with rivals. For example, in long distance communications roughly 10% of the market is necessary for MES. If sales for a long distance operator fail to reach 10% of the market, the firm is not competitive.

    The existence of such an economy of scale creates a barrier to entry. The greater the difference between industry MES and entry unit costs, the greater the barrier to entry. So industries with high MES deter entry of small, start-up businesses. To operate at less than MES there must be a consideration that permits the firm to sell at a premium price - such as product differentiation or local monopoly.


Barriers to exit work similarly to barriers to entry. Exit barriers limit the ability of a firm to leave the market and can exacerbate rivalry - unable to leave the industry, a firm must compete. Some of an industry's entry and exit barriers can be summarized as follows:


Easy to Enter if there is:
  • Common technology

  • Little brand franchise

  • Access to distribution channels

  • Low scale threshold

Difficult to Enter if there is:
  • Patented or proprietary know-how

  • Difficulty in brand switching

  • Restricted distribution channels

  • High scale threshold

Easy to Exit if there are:
  • Salable assets

  • Low exit costs

  • Independent businesses

Difficult to Exit if there are:
  • Specialized assets

  • High exit costs

  • Interrelated businesses



DYNAMIC NATURE OF INDUSTRY RIVALRY

Our descriptive and analytic models of industry tend to examine the industry at a given state. The nature and fascination of business is that it is not static. While we are prone to generalize, for example, list GM, Ford, and Chrysler as the "Big 3" and assume their dominance, we also have seen the automobile industry change. Currently, the entertainment and communications industries are in flux. Phone companies, computer firms, and entertainment are merging and forming strategic alliances that re-map the information terrain. Schumpeter and, more recently, Porter have attempted to move the understanding of industry competition from a static economic or industry organization model to an emphasis on the interdependence of forces as dynamic, or punctuated equilibrium, as Porter terms it.

In Schumpeter's and Porter's view the dynamism of markets is driven by innovation. We can envision these forces at work as we examine the following changes:

Top 10 US Industrial Firms by Sales 1917 - 1988

  1917 1945 1966 1983 1988
1 US Steel General Motors General Motors Exxon General Motors
2 Swift US Steel Ford  General Motors Ford
3 Armour Standard Oil -NJ Standard Oil -NJ (Exxon) Mobil Exxon
4 American Smelting US Steel General Electric Texaco IBM
5 Standard Oil -NJ Bethlehem Steel Chrysler Ford  General Electric
6 Bethlehem Steel Swift  Mobil  IBM Mobil
7 Ford  Armour Texaco Socal (Oil) Chrysler
8 DuPont  Curtiss-Wright US Steel DuPont Texaco
9 American Sugar Chrysler IBM  Gulf Oil DuPont
10 General Electric Ford  Gulf Oil Standard Oil of Indiana Philip Morris


10 Largest US Firms by Assets, 1909 and 1987

  1909 1987
1 US STEEL GM (Not listed in 1909)
2 STANDARD OIL, NJ (Now, EXXON #3) SEARS (1909 = 45)
3 AMERICAN TOBACCO (Now, American Brands #52) EXXON (Standard Oil trust broken up in 1911)
4 AMERICAN MERCANTILE MARINE (Renamed US Lines; acquired by Kidde, Inc., 1969; sold to McLean Industries, 1978; bankruptcy, 1986 IBM (Ranked 68, 1948)
5 INTERNATIONAL HARVESTER (Renamed Navistar #182); divested farm equipment FORD (Listed in 1919)
6 ANACONDA COPPER (acquired by ARCO in 1977) MOBIL OIL
7 US LEATHER (Liquidated in 1935) GENERAL ELECTRIC (1909= 16)
8 ARMOUR (Merged in 1968 with General Host; in 1969 by Greyhound; 1983 sold to ConAgra) CHEVRON (Not listed in 1909)
9 AMERICAN SUGAR REFINING (Renamed AMSTAR. In 1967 =320) 
Leveraged buyout and sold in pieces)
TEXACO (1909= 91)
10 PULLMAN, INC (Acquired by Wheelabrator Frye, 1980; spun-off as Pullman-Peabody, 1981; 1984 sold to Trinity Industries) DU PONT (1909= 29)



GENERIC STRATEGIES TO COUNTER THE FIVE FORCES

Strategy can be formulated on three levels:

  • corporate level
  • business unit level
  • functional or departmental level.

The business unit level is the primary context of industry rivalry. Michael Porter identified three generic strategies (cost leadership, differentiation, and focus) that can be implemented at the business unit level to create a competitive advantage. The proper generic strategy will position the firm to leverage its strengths and defend against the adverse effects of the five forces.


Recommended Reading

Porter, Michael E., Competitive Strategy: Techniques for Analyzing Industries and Competitors

Competitive Strategy is the basis for much of modern business strategy. In this classic work, Michael Porter presents his five forces and generic strategies, then discusses how to recognize and act on market signals and how to forecast the evolution of industry structure. He then discusses competitive strategy for emerging, mature, declining, and fragmented industries. The last part of the book covers strategic decisions related to vertical integration, capacity expansion, and entry into an industry. The book concludes with an appendix on how to conduct an industry analysis.

In : Business Principles That Work 


Tags: porter's five forces a model for industry analysis 
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