Marketing Strategy and Competitive Positioning pdf ebook

Price elasticity and sensitivity
Unless the company has a major cost advantage over its main rivals, markets that are less 
price sensitive, where the price elasticity of demand is low, are more attractive than those 
that are more sensitive. In the more price-sensitive markets there are greater chances of 
price wars (especially in the mature stage of industry evolution) and the shake-out of the 
less efficient suppliers.
Bargaining power of customers
Those markets where buyers (ultimate customers or distribution chain intermediaries) have 
the strongest negotiating hand are often less attractive than those where the supplier can 
dominate and dictate to the market.
In the UK grocery market, the buying power of the major supermarket chains is consider-
able. Together the top five chains supply around 78 per cent of the nation’s food shopping 
needs. Food manufacturers and processors compete vigorously for shelf space to make their 
products available to their ultimate consumers. Indeed, some supermarket chains are now 
moving towards charging food manufacturers for the shelf space they occupy.
Similarly, in the market for military apparel a concentration of buying power (by the 
governments) dictates to potential entrants on what basis they will compete.
Seasonality and cyclicality of demand
The extent to which demand fluctuates by season or cycle also affects the attractiveness of 
a potential segment. For a company already serving a highly seasonal market, a new oppor-
tunity in a counter-seasonal market might be particularly attractive, enabling the company 
to utilise capacity all year round.
9.3.2 Economic and technological factors
Issues reflecting the broader economic characteristics of the market and the technology used 
include the following.
Barriers to entry
Markets where there are substantial barriers to entry (such as protected technology or high 
switching costs for customers) are attractive markets for incumbents but unattractive mar-
kets for aspirants. While few markets have absolute barriers to entry in the long term, for 
many companies the costs of overcoming those barriers may make the venture prohibitively 
expensive and uneconomic.