Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 3 THE CHANGING MARKET ENVIRONMENT
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There are gaps in the market. In markets where the existing incumbents are not ade-
quately serving the wants and needs of customers, there is more opportunity for entrants 
to establish themselves in underserved, or neglected, segments of the market. Highly 
segmented markets, in particular, where existing firms are slow to recognise diversity in 
customer requirements, provide tempting opportunities for new entrants.
3.7.3 The threat of substitutes
New entrants may use the existing technology of the industry, or they may attempt to revo-
lutionise the market through leapfrogging. Indeed, technological substitution may come 
from new entrants or from existing firms doing things in new ways. Substitution can increase 
competitiveness of an industry for a number of reasons:
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By making existing technologies redundant. Classic examples include: the decimation of 
the slide rule industry by the advent of pocket calculators; apps or even artificial intel-
ligence; the overtaking of mechanical timepieces by electronic technologies and, now, 
wearable technologies; and the advent of digital television replacing analogue. Where 
technologies are changing rapidly, competition between firms to stay ahead also tends 
to be intense.
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By incremental product improvement. Even where industries are not revolutionised 
overnight by step-changes in technology, existing market offerings may become quickly 
dated. Technological development in the computer industry, for example, proceeds 
apace, with personal computers becoming out of date almost as soon as they have been 
shipped! The advent of email as a means of communication has not made the letter obso-
lete, but it has had a significant impact on postal services. Email is simply a letter posted 
down the telephone wires rather than in a letterbox. More recently Facebook, Instagram 
and Snapchat have replaced SMS and email as a communication medium favoured by 
young people.
3.7.4 Bargaining power of suppliers
The balance of power between the members of an industry, its suppliers and its customers 
can significantly affect the level of competitiveness experienced by all. Where suppliers and/
or customers have greater power than the members of the industry, competition within the 
industry for scarce suppliers or scarce customers tends to be more intense. Suppliers tend 
to have more bargaining power where the following hold:
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