Marketing Strategy and Competitive Positioning pdf ebook


They are more concentrated than sellers


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hooley graham et al marketing strategy and competitive posit

They are more concentrated than sellers. Fewer buyers than sellers, especially where 
individual buyers account for large volumes of purchases and/or the sellers produce rela-
tively small amounts each, means greater bargaining power for the customer. In grocery 
retailing, for example, a handful of major multiples command such a large percentage 
of total sales that they can practically dictate terms to their suppliers.
● 
There are readily available alternative sources of supply. Especially in the supply of com-
modity products or services, it may be relatively easy for buyers to buy elsewhere.
● 
Buyer switching costs are low. Where the inconvenience or cost of switching suppliers is 
low, greater power resides with the buyer, who can ‘shop around’ more to get better deals.
3.7.6 Competitiveness drivers
Taken together, these five forces offer a useful framework for assessing the factors likely 
to drive competition. They also suggest ways in which the players in the industry – current 
incumbents, suppliers and buyers – might seek to alter the balance of power and improve 
their own competitive position. We can summarise as follows. Where the following industry 
characteristics are present, expect greater levels of competition:
There is little differentiation between market offers
Industry growth rates are low
High fixed costs need to be recovered
High supplier switching costs
Low buyer switching costs
Low entry barriers
High exit barriers


76
CHAPTER 3 THE CHANGING MARKET ENVIRONMENT
As we shall see later ( Chapter 10 ), one of the most successful ways of countering a highly 
competitive environment is to differentiate your offering from that of competitors, in a 
way that is of value to customers. That creates buyer switching costs, higher entry barriers 
and helps create a defensible position in the market irrespective of industry growth rates 
or costs of supply.
3.8 
The product life cycle 
The product life cycle (PLC) is an insightful tool into an industry’s competitive environment 
( Cravens and Piercy, 2012 ) and market dynamics. Its premises are that: 
● 
All products have a limited lifespan until a better solution to the customer’s problems 
comes along.
● 
Life cycles of products follow more or less predictable patterns or phases (see Figure 3.8 ).
● 
Market conditions, opportunities and challenges vary over the life cycle.
● 
Strategies need to adapt over the life cycle (see Chapter 11 ).
Each of the four key stages of the product life cycle (introduction, growth, maturity and 
decline) will be introduced here. 

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