Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 3 THE CHANGING MARKET ENVIRONMENT
In marketing terms, maximising leverage will involve four interrelated ecosystems: that of 
the company, competitors, the category and customers (see Sarkar and Kotler, 2019 ). 
These approaches combine to make strategic planning in general, and marketing plan-
ning in particular, more difficult now than they have ever been before. They also make them 
more vital activities than they have ever been before. Strategic marketing planning today 
attempts to build flexibility into the organisation to enable it to cope with this increased 
level of complexity and uncertainty and to take full advantage of the changing environment. 
At the heart of that planning process is the creation of a strong competitive position and a 
robust marketing strategy – the subject of the remainder of this text.
3.7 
The Five Forces model of industry competition 
Porter (1980) suggested that five main forces shape competition at the level of strategic 
business units and that a systematic analysis of each in turn can help managers identify 
the keys to competitiveness in their particular industry. The five forces are shown in 
Figure 3.7 .
The Five Forces model is not merely of use to commercial organisations. It can also be 
used by organisations in the public and not-for-profit sectors to better understand their 
customers, suppliers and other organisations with whom they may be competing for sup-
port (financial or otherwise). We discuss each of the five forces in turn. 
3.7.1 Rivalry among existing companies 
A prime source of competition in any industry is among the existing incumbents. This 
rivalry is likely to be most intense where a number of conditions prevail: 
● 
Where the competitors in the industry are roughly evenly balanced in terms of size and/or 
market share. The UK chocolate market is a case in point, where three rivals (Cadbury, 
Nestlé and Mars) all command roughly equal market shares. Competition between them 
for an extra percentage point of the market is intense, leading to high levels of advertising 
spend, strong price competition and continuous launch of new products.
Figure 3.7 
Five 
forces driving 
competition
Source: from Competitive 
Strategy: Techniques for 
Analyzing Industries and 
Competitors (by Michael 
E. Porter, 1998 ) Reprinted 
with the permission of 
Free Press, a division of 
Simon & Schuster, Inc., 
Copyright © 1980, 1998 
by The Free Press. All 
rights reserved.
Threat of new
entrants
Threat of
substitutes
Bargaining
power of
suppliers
Bargaining
power of
buyers
Rivalry among
existing firms in
the industry

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73
THE FIVE FORCES MODEL OF INDUSTRY COMPETITION
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