Marketing Strategy and Competitive Positioning pdf ebook

During periods of low market growth, especially during the mature and decline stages 
of the product life cycle. Under such conditions, individual company growth is achieved 
only at the expense of competitors, and hence rivalry intensifies. The mobile telephone 
market is a case in point, where growth slowed in the early 2000s and existing firms such 
as Ericsson and Nokia found themselves with excess production capacity and entered 
into increased price competition to secure sales.
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Where exit barriers are high. If firms find it difficult to exit a market once they have 
entered, they are more likely to compete hard for success. High initial investments may 
create psychological (or egotistical) barriers to exit, high costs of redundancy (monetary 
or social) may deter exit, or e-market presence may be necessary to enable the firm to 
compete in more lucrative segments (for many state-owned mail services the cost of 
remaining in business is to continue to deliver mail to expensive-to-reach, out-of-the-way 
places).
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Where product differentiation is low. In markets where customers see little variation 
across products, where intrinsic quality and external value are perceived to be similar, 
competition for sales tends to be more intense. The prime reason is that customer switch-
ing costs are low – the cost (financial, inconvenience, etc.) to a customer of changing 
from one supplier to another.
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Where fixed costs are relatively high. High fixed costs relative to variable costs require 
greater sales volume to cover them. Until that volume is achieved, rivalry can be 
intense. In power supply industries the fixed costs of power generation are substantial 
compared with the variable costs of supplying power, leading to intense rivalry among 
generators.
3.7.2 The threat of market entry
In addition to considering existing rivals, organisations should also consider the potential 
for new entrants to emerge. The airline industry, for example, has seen a number of low-cost 
‘no-frills’ entrants such as easyJet and Ryanair enter the market. A number of conditions 
make market entry more likely. Entry barriers can be low where the following hold:
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